Basket of Goodies is entering its first year of operation. BOG recognizes the importance of crafting and following a comprehensive marketing plan. BOG offers the market a high quality, gourmet gift basket at a reasonable price. In addition to having four stock baskets, BOG will allow customers to customize their own basket from a list of possible ingredients.
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BOG possess good information about the market and knows a great deal about the common characteristics of the prized customers. BOG will leverage this information to better understand who is served, their needs, and how BOG can best communicate with them. BOG recognizes that this is an evolving process that requires multiple intervals of attention throughout the year.
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Bassket of Goodies is providing its customers with very attractive gourmet food baskets. These baskets come in several standard themes as well as the option of creating a custom basket. BOG seeks to fulfill the following benefits that are important to customers:
- Selection- BOG offers many different stock baskets as well as the opportunity for the customer to choose the perfect ingredients for their basket.
- Price- BOG operates on a low overhead model, allowing them to generate fair margins and competitive prices.
- Customer Service- BOG recognizes that superior customer service is needed in order to gain market share and be competitive.
The market trend for the gift basket industry has been one of consolidations and mergers with larger companies purchasing smaller local companies. This trend can be rationalized for several reasons:
- Economies of scale allows larger companies to generate better margins than small, local players.
- Brand equity/recognition is powerful within the industry as many customers choose their basket maker from popular, well-known companies, such as Hickory Farms, based on name alone. Therefore it makes sense for larger companies to grow in number of franchises/outlets and geographic coverage.
In 2000, the national gift basket industry had $806 million in sales. The market is growing at a steady 4% per year. This growth can in part be attributed to an increase in product offerings. For years the gift baskets from most of the larger companies were fairly utilitarian and plain; some people got fruit baskets, others got meat, cheese, and cracker baskets. Many of the companies have tried to generate growth by offering a wider selection of baskets.
The following SWOT analysis captures the key strengths and weaknesses within the company, and describes the opportunities and threats that face BOG.
- Vendors who have local, high quality ingredients.
- Artistic flair that provides BOG with basket appearances that are unmatched.
- Low overhead that provides excellent margins and flexibility in manufacturing.
- As a home-based start-up, if sales really spike it might be difficult to fulfill a large increase in orders.
- A limited marketing budget to generate awareness of BOG and its service/product offerings.
- A limited number of hours a day limits time that can be spent on sales/business development relative to order fulfillment.
- Participation in an industry that is generally quite steady in terms of sales.
- The ability to have a marginal decrease in the spread of fixed costs relative to each basket as sales increase.
- Competition from industry gorillas like Hickory Farms or substitute competitors like FTD.
- The industry is attractive, in part, because of its simplicity, creating an incentive for new entrants into the market.
There are many different forms of competition in the gift basket business:
- Similar gift basket type retail stores- There are several of these stores located in Stevens. These competitors offer a wide range of gift baskets, however, none of them are concentrating on the higher end, gourmet products lines.
- Nut/fruit companies- There are several stores that concentrate on nuts and or fruit baskets.
- Bath product gift basket companies- There is currently one gift basket company that concentrates on bath products. Bath products have a slightly smaller recipient market, since typically women are most appreciative of bath products gifts, though more and more men are aware that this is the gift to give.
- Regional gift basket- There is one retailer that sells gift baskets composed of local products. These types of baskets tend to appeal to people that are buying gifts for people that are not from this area.
- Candy gift baskets- There are a couple of candy stores that offer a candy gift basket as one of their products . Similar to the bath products basket, candy typically appeals to women a bit more than to men.
- Florists- Flowers are a tried and true product that competes with gift baskets. Once again flowers tend to appeal to women more so than men.
Basket of Goodies sells gift baskets that they put together themselves. BOG's theme for the baskets is gourmet. Their premier baskets are a smoked fish basket, a fruit basket, a pasta dinner basket, and a picnic basket that has caviar, crackers, fruit, and smoked fish. BOG also offers a custom basket that allows customers to pick items from a list and BOG will assemble the basket with their custom ingredients.
For the custom baskets, BOG will provide a list of options grouped into four different categories. The customer then chooses two items from each of the four categories and the gift basket is made for them.
In addition to previously mentioned production baskets, BOG will typically have one or two specials, seasonally based.
Keys to Success
The keys to success are:
- Customer service.
- Competitive or superior product offerings.
BOG is still in the speculative stages as a start-up business. Its critical issues are:
- Control start-up expenses.
- Continue to take a modest fiscal approach, expanding in size only when it is no longer possible to fulfill orders at the current headcount. It is important to do this judiciously because if the business is expanded and demand suddenly falls, BOG could be subjected to severe financial distress.
- Generate awareness and customer loyalty for repeat business and referrals.
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