a. What will be your business strategy?

Product-differentiation or low-cost

provider?

The business strategy that will be used for starting my jellybean business is the product

differentiation strategy as low-cost provider would be a risky attempt in the initial stages of

the business. Product-differentiation strategy is an attempt to make the products different than

the competitors within the sector. The product differentiation strategy would require

researching the products of the competitors and identify the different sector products of the

competitors and the product manufactured by my business.

Before the pandemic plunged the world into crisis, the strategy of low-cost provider

could be implemented as there would be sufficient capital to start the business on a medium

to large scale (Lam et al., 2021). Post-Covid period is marked by creativity where new

solutions for existing products and new innovations are taking place at a rapid pace. The

objective of the business would be to provide new flavors at a competitive price. Companies

such as Jelly Belly, The Jelly Bean Factory and jelly beans have had a successful track record

in this business by producing unique products and offering it to the consumers at a

competitive price point. The basic requirements to start this business will require an

infrastructure and jellybean manufacturing equipment along with experienced confectioners

who can improve the product upon the data that will be gathered and analyzed.

The jellybeans that will be manufactured by this new business will focus on serving

multiple target audiences apart from the customer base of children. The data collected will

provide the foundation for the manufacturing of jellybeans on a larger scale. The price point

will be a crucial factor in determining the success of this strategy and the business overall in

this particular sector. The Big Data can serve as the business model for this business as there
is a lot of data to be gathered on the potential target consumers and retailers as well in the

domestic context (Kanagal, 2017).

b. How much money do you have for investing in your business and how much money

you need? How do you plan on raising cash needed for your business?

For our jellybean business, we have $50,000 in hand and we need $75000 more for daily

business operations. It is true to say that if the management team, opportunities in the market,

operating systems are sound, then there is a lot of help for them in the market. It just needs

courage and confidence to ask for money.

According to Harvard Business Review, a company is Seattle was convinced that they

will raise $11 Million in next 3 years and they just need some money to boost up their

business. They went to several banks but all of them refused to pay the credit and in return,

they told him to gain more equity and assets to be eligible for obtaining loans. Finally, they

agreed to their first public offering and a lawyer joined them to take the company public in

Vancouver and London to raise $2.5 million faster. They failed many times during the fund-

raising process sometimes due to inefficient search or poor structured deal (Timmons &

Sanders, 2010).

Our dream is to make more than 500,000 pounds a day and we know that raising money

is not that easy. We need to keep a lot of things in mind before planning to raise funds. One

way is to present our business idea in front of shark tanks and ask for money.

“International sales are our biggest growth area,” said Robert Simpson, president and chief

operating officer. Jellybeans are now available in 40 countries, up from 20 two years ago

(Murphy, 2020).
We can finance from various sources like:

 Friends or family

 Government funding

 Credit unions

 Investors like shark tank

 Angel investors

Seeking funds can indirectly hit company’s privacy because while doing that, one must be

prepared to tell your weaknesses, marketing strategies, available cash and how much you

need. Moreover, you are sometimes asked to give financial statements of the compan

c. What will be your selling price per one jellybean bag of 200 grams? What factors

you need to take into considerations when pricing the product?

There are many factors that needs to be considered when pricing a product.

1. Pricing needs to match up with our target market. Our jellybean will target

women between 20 to 60 years old and tween market. We want the customers to buy

our product so we will use the strategy that is appropriate with the target audience.

Different colours and flavours are always appealing to the tween market. We will

offering different variety of jellybeans like sugar-free, vitamin enriched jellybeans

that will appeal to mothers. We will also offer electrolytes enhancing beans which

will appeal to health conscious consumers(Jelly Belly, 2012).

2. Competitors Prices: We will be considering competitors pricing too. The competitor

in the market is charging between $3 to $ 8 for 200g. Since our product will have

some healthy content, we can sell it for slightly higher prices than our competitors as
 we will be creating value for the customers. And customers are likely to pay higher

prices for the quality they are receiving(QuickBooks, 2014).

3. Odd number pricing: We will consider odd-number pricing as it is more appealing

to customers. This pricing strategy has been in successful for decades. A product

retailing at $ 3.99 is much more appealing than $ 4.00. Another factor to consider is

total cost associated to produce the final product. The price of the product should

generate enough revenue to cover the cost. At the start of the business, we are not

targeting for profits but enough revenue that will cover our cost.

4. Positioning: The factor to consider when pricing the product is the positioning.

Where do we want to be in the marketplace, that is if our jellybean products want to

be the most expensive, high-end brand, the cheapest or somewhere in the middle. We

certainly want to sell quality in terms of health content and taste content as well.

5. Cost of Production: We need to calculate how much our product cost, before pricing

the product. It includes the fixed and variable cost. It includes the raw materials,

direct labor, operating expenses, cost associated with borrowing money, cost of

marketing and selling, rent and shipping and stocking fees. Getting the ideas of all

these costs will help in deciding the price of the product and how much quantity we

need to sell to cover the all the cost of production and earn profit.

Considering all these factors, we will be selling a bag of jellybean of 200 g for $ 7.99. To

break in the market, we will start with this price. We may consider increasing the prices as

the brand awareness and consumer acceptance increase.

D) What variable costs will incur once you start your operations?
With the beginning of the operations there could be some variable costs that are incurred in

operations as the market is always evolving and changing. Variable costs are costs that are

measured against the fixed costs of an organization. The fixed costs are considered to be rent

of the space acquired for manufacturing, utilities, insurance, amortization and depreciation as

well. Fixed costs are unavoidable whereas variable costs are unpredictable such as raw

materials, sales commissions, credit card fees and supplies for production.

These are variable costs that have been identifying once the operation of the business begins

as the price of raw materials keep changing from time to time. These raw materials will be

used in making the product and sell it to the consumer (Dey, Bhuniya & Sarkar, 2021). In

order to maintain the machinery that will manufacture the product, it requires supplies in

order to maintain those machinery used in the factory. Sales commissions is another variable

cost that will incur depending upon the number of sales that a worker makes that might

increase or decrease his salary. The credit card fees have to be paid so that the customers

have the payment option of using their credit card to purchase products manufactured by the

organization.

These variable costs need to be measured against the fixed cost that have been estimated

before manufacturing begins. To be additional variable costs as well that can increase or

decrease the margin of profit estimated for the jelly-bean business. Therefore, it is important

that the variable cost be measured against the fixed costs with some room for additional

variable costs that could be incurred depending upon the market environment. Hence, it is

important that the business keeps in mind to closely monitor the variable costs (Rounaghi,

Jarrar & Dana, 2021).

References

Dey, B. K., Bhuniya, S., & Sarkar, B. (2021). Involvement of controllable lead time and

variable demand for a smart manufacturing system under a supply chain management. Expert

Systems with Applications, 184, 115464.

Harvard business review by Jeffery A. Timmons and Dale A. Sander (Magazine Nov-Dec

1989)

Jelly Belly. (2012). Jelly Belly Branding and Marketing Communication.

https://www.researchomatic.com/jelly-belly-148226.html

Kanagal, N. B. (2017). Development of market orientation for marketing strategy

formulation. International Journal of Marketing Studies, 9(4), 54-66.

Lam, H. Y., Tsang, Y. P., Wu, C. H., & Tang, V. (2021). Data analytics and the P2P cloud:

an integrated model for strategy formulation based on customer behaviour. Peer-to-Peer

Networking and Applications, 14(5), 2600-2617.

New York Times by Kate Murphy (June 2010)

QuickBooks. (2014). 5 Things to Consider when Pricing Your Product.

https://quickbooks.intuit.com/r/pricing/things-consider-pricing-your-product/

Rounaghi, M. M., Jarrar, H., & Dana, L. P. (2021). Implementation of strategic cost

management in manufacturing companies: overcoming costs stickiness and increasing

corporate sustainability. Future Business Journal, 7(1), 1-8.