Virtual Grocery Shop: Feasibility Study

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Table of Contents

Introduction
Product/Service
Industry/Market
Organization
Finance
Works Cited
Appendix

Introduction

The virtual and national expansion of companies is happening at an ever growing pace. Most of virtual and online stores have shifted from multi domestic marketing to international marketing. The appearance of virtual market has been enthused by the speedy enlargement and mixing of countries; the configuration of local trading blocs; the formation of market economies; and advances in production and communications technologies.

Product/Service

Product – a virtual grocery shop

The online shop will sell popular national fruits and vegetables. Also, it will sell some exotic fruits such as mango, kiwi, etc. The main types of products involve general grocery, meat and seafood, the Deli, meals made easy, health and beauty products. Like the traditional value chain, the virtual value chain is carefully managed if its full potential. Virtual consumers are not familiar with grocery shopping online but they are familiar with main food brands and products. Virtual market represents great opportunities for GreenStar to expend its international activities and enter the new market (Drejer 43).

Target market

The core of customers is middle and upper class consumers. The age and gender will not have a great impact on purchasing power. GreenStar proposes products for two types of customers: home buyers and for business purposes.

Product Benefits and Positioning

The product of GreenStar is grocery product line including such types of products as general grocery. GreenStar is based on a specific contractual formula based on high quality and on time delivery options. Resource-based philosophy and innovations create new opportunities for market development and brand recognition. Customers’ loyalty can be achieved through the people who are employed by GreenStar. The core strategy of GreenStar will be based on value propositions and product differentiation is well developed (Hollensen 87)l The new channel will be positioned as a unique one which promises mobility and social freedom. Personalization, innovation, and technology will be the core of positioning strategy.

Product distribution

The grocery products will be distributed through online stores (web sites) and delivered directly to the end consumers using free delivery service. For GreenStar, the market skimming pricing strategy will be part of a deliberate attempt to reach a market segment that is willing to pay a premium price for a particular product. Companies that seek competitive advantage by positioning their products in the premium segment frequently use market skimming. The company will follow aggressive advertising and skimming pricing strategy to attract potential customers.

Industry/Market

Growth Rates and Importance of Customer

Grocery market is marked by increasing capital markets activity over the past 5 years. It is estimated that average annual returns are anticipated to exceed 13 percent over the next 10 years, with investment alternatives performing at single digit growth rates (approximately 7 percent to 9 percent). This approach is based on GreenStar superior understanding of the problem solved by the product, the benefits it offers and issues it addresses.

The US online grocery shops are Netgrocer.com, Groceries Express, Home Town Favorites, etc. Industry analytics project 3 % increase in sales the next year. It is expected that US online grocery spending will reach $10 billion in 2010. The products will be delivered within a day from order date (Drejer 77). It is expected that the Internet and online shopping Market will grow each year, so more and more people will be able to buy products online. The processes by which this value is created are themselves online (bringing together disparate pieces of information, analyzing, sorting and distributing that information), as are its customers (companies that need information for their own needs). For GreenStar customers are the core of business.

Customers

GreenStar pays a special attention to delivery service and proposes fast delivery for all consumers. The advantage if that a potential customer can choose the time of delivery and check on the site whether this time is available or not. The actual product is grocer while the augmented product is delivery service (Fill 62; see appendix 1). Online grocery shipping is an attractive industry because it has few players and propose companies a potential to grow fast. The customer can order exotic and traditional goods on line and check their availability and time of delivery. In other words, the more experiences to which customers are subjected, the more likely they are to be able to make effective purchase. Also, the more perceptive they are, the more likely they are to generate effective purchase from that experience. The virtual world can positively increase the level of quality that a buyer can assimilate.

Position in product life cycle

In terms of the product life cycle, GreenStar is on developing (growth) stage. The traditional characteristics of this stage are exceedingly resource intensive. They require the company to remain abreast with the current developments in their own environments and preferably several other fields as well. The core benefit of the product is fast delivery and high quality products of all types. A unique image of the grocery purchase and sense pf belonging to new generation will appeal to potential consumes. GreenStar refer to the Internet throughout because the online shopping represents a very real and very accessible attempt to introduce the concept of a virtual business alongside the physical world. The online shopping is beginning to touch all aspects of modern life; it is the new society that, probably, continues to make best use of it today. Networks will involve local agents and international grocery retailers able to deliver high quality products at the shortest possible period of time (Drejer 21).

Operating Margins

It is expected that the company will earn $100,000 during the first year. The main competitors of GreenStar are traditional grocery stores and other supermarkets specialized in cheap food and grocery products.

Timeliness

It will take a month to organize and plan all activities for online shop and introduce it to general public.

Organization

Experience and passion

Organizational; perception of benefit-generating attribute will be based on unique design and stylish image appealing to a wide target audience. It is expected that all employees will be highly professionals in IT and customer support. The company will need three customer representatives, one IT administrator and a manager.

Market knowledge and networks

The company will need four computers, the Internet access, a room fro four people, a toll free telephone number. Also, it will have to sign up contracts and agreements with the local transportation (delivery) company which would deliver goods to the end consumers.

Finance

Start-Up-Cash

The start up cash is $50,000. This money is required to open and register the online company and organize transpiration.

Performance

In order to ensure success it would be helpful to analyze online shopping and customer support provided by other companies in the country. The necessary flexibility and proactive behavior are not built into promotional plans. Furthermore, it is assumed that business conditions are not likely to change significantly and that the best approach is to implement the plans as they were originally devised. The blend of controllable marketing variables required producing the response wanted in the target market (Hollensen 34).

Works Cited

Drejer, A. Strategic Management and Core Competencies: Theory and Application. Quorum Books, 2002.

Fill, C. Marketing Communication: Contexts, Contents, and Strategies 2 edn.

Upper Saddle River, NJ: Prentice Hall, 1999.

Hollensen, S. Global Marketing: A Decision-Oriented Approach. Financial Times/ Prentice Hall; 4 edition, 2007.

Jacoby, J., Johar, G.V., Morrin, M. Consumer Behavior: A Quandrennium. Annual Review of Psychology, 49 (1998), 34=37.

Appendix

Market Analysis
		Year 1	Year 2	Year 3	Year 4	Year 5
Potential Customers	Growth						CAGR
University Students	4%	15,000	15,600	16,224	16,873	17,548	4.00%
Office Workers	3%	25,000	25,750	26,523	27,319	28,139	3.00%
Seniors	5%	18,500	19,425	20,396	21,416	22,487	5.00%
Old age people	2%	12,500	12,750	13,005	13,265	13,530	2.00%
Other	0%	25,000	25,000	25,000	25,000	25,000	0.00%
Total	2.68%	96,000	98,525	101,148	103,873	106,704	2.68%

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