Vending machines at football fields

Instructor: Yevgeniya Kim

Group 16:

Section #1: Alibek Abdygapparov 20131127

Section #1: Aidana Baigutanova 20131694

Section #2: Ainur Alimbetova 20131592

Section #2: Saida Dagubayeva 20130578

Almaty 2015

Content

• Proposal……………………………………………………………………......3

• Business description…………………………………………………………...4

• Market strategies…………………………………………………………….....7

• Competitive analysis…………………………………………………………..12

• Design and development plan…………………………………………………16

• Operations and management plan……………………………………………..21

• References……………………………………………………………………..26

Business plan proposal

Idea: Vending machines at football fields.

Issue: Due to the dramatic increase of people who started to be engaged in sports, especially football, more and more football fields got to be opened. As football is one of the sports that require constant presence of physical energy, lots of football players are involved in the following issues:

1. Constant need in the main sources of energy – water and food.

2. Absence of stores or shops which are located directly close to the field.

3. Severe weather conditions during the wintertime have a negative impact on the health of players.

4. In the reason of hard time management issues existing in the modern world, more and more people have no opportunity to eat properly enough.

Mission: Provision of football fields with universal vending machines which will attract more people and contribute to the expansion of sport development in our country. The idea will provide the following solutions:

1. Provide people with easy and quick access to the different types of food and beverages.

2. During the wintertime, hot drinks meet the needs of people’s constant maintenance of normal body temperature despite the abnormally low weather conditions outside.

3. Substitution of junk food with energy bars for busy people will bring such results as economy of time and money, and the main is a combination of enjoyable with beneficial (the preservation of a healthy lifestyle).

Location: Vending machines will be originally located at the intersection of Shevchenko and Zharokov streets.

Reasons for accommodation:

• It has the highest demand among all football fields in Almaty

• There are three football fields in one place that makes this place unique

• Football fields are equipped with roof, dressing room and shower

• Many championships and competitions, such as University Cups and Football League Fans (FLF) are held there

The project is expected to blow up the market with a completely new way of using vending machines and thus increase the demand for our product since the uniqueness of the idea is a key to solving many issues that football players and fans are struggling with.

Business description

Vending machines (VM) are related to the food service industry - most popular market of the modern world. There are many branches of the food industry, which vary from expensive restaurants to bean-wagons. However, food service is improving in a technological way and the bright example of such improvement is represented by vending machines that allow us to save time while buying simple essentials like drinks and snacks. Thanks to saved time and energy, people have an opportunity to do activities they truly love and are really interested in that bring both mental and physical benefits to our mind and body. First thing that comes to mind of everybody is sport activities. Sport is a profitable sphere for implementing vending machines business due to its uniqueness and existing demand.

• Brief history of the industry:

According to National Automatic Merchandising Association, the history of this industry took place in the 215 B.C. in the Egypt, where Holy Water was delivered to common people through a special device. First modern prototype of VM appeared in 1880s in London, England. Vended products are not extremely new for the global market, but a key issue arises due to the high development of the modern world.

• Present outlook and future possibilities

According to European Vending Association, VM are highly-developing branch of the food service industry with an annual income of 30 billion dollars worldwide. Approximately 700,000 people are working within this type of business. Due to the technological development, this type of industry is becoming a widespread phenomenon. A lot of factors such as globalization and high level of trade relations positively influence food service market of Kazakhstan and pave a path to the brighter future of VM industry.

• Benefits of VM are the following:

1. Convenient in terms of speed and self-service (no need to wait in long queue)

2. 24/7 availability

3. Clean, hygienic, safe, always at the right temperature

4. Flexible placing options

5. Low rental costs

6. No expenses on hiring staff (i.e. sellers, waiters, cleaners)

In comparison with other food service industries, all the above mentioned benefits are giving competitive advantages to the startup. As the project is intended to provide food service on the football fields, shops and bean-wagons have much less priority due to their location inconvenience, since the demand of football players is mainly focused on concrete types of food and beverages, while shops provide too wide and unwanted range of products.

• Legal form of the business

Legal form of the business is a sole proprietorship.

• Products that we intend to the market

As the main target audience consists of football players, the vending machines will mostly include products that may provide energy and make people feeling comfortable.

1. Beverages will mainly consist of:

• 0.5 l bottles of non-carbonated water (Vita and Asu)

• Fuse-Tea, Nestea, Vitamin-C

• Hot tea, hot chocolate, milk chocolate, coffee (cappuccino, latte and so on)

First of all, water is in a highest demand for all football players because of constant physical strain. VM will provide 0.5 l bottles of Vita and Asu companies due to their high-quality and stable position on the market. Nowadays, one of the main products of “Coca-Cola” and “Nestle” companies are Fuse Tea and Nestea, respectively, which have captured the market within couple of months last year and thus are in a high demand among population. Vitamin-C was chosen due to its beneficial characteristics that are potentially good for all football players in order to recharge themselves with energy. Furthermore, during wintertime, humans’ preferences are always focused on hot drinks that may maintain normal physical body temperature.

2. Food will consist of:

• Snacks (7Days croissants, Biscream cookies, etc.)

• Chocolate bars (Snickers, Twix, Bounty, Albeni, Kitkat, etc.)

• Energy bars (Corny and Fitness)

Our line of food will differentiate among other vending machines since it focuses on combination of enjoyable and beneficial. Explaining this concept, it can be said that not all chocolate bars have such properties, which can give footballers strength and energy even for a short-time period. Thus, in order to save the balance between something that corresponds to the taste of people and something that is beneficial for the health, the key to this issue is energy bars. Determining the main characteristics of the energy bars, it should be noticed that energy bars mainly consist of cereals, bran, oatmeal and so on, glued together with the help of honey or sugar syrup. Thus, they are more beneficial than chocolate bars that consist of unnatural chocolate with refined oils and sugar substitutes. Even though, both of them are forecasted to be in a demand due to consumers’ wants and desires.

• Customers

Target group mainly consists of football players, their fans and spectators.

• Distribution of the products

The process of distribution of the products to customers includes the following stages:

1. Acquirement of products from suppliers

2. Delivering the products to machines

The target placement of the machines is the football fields on the intersection of Zharokov and Shevchenko streets. At an early stage, distribution will be carried out through the purchase of products in “Optovka” and other markets. However, there is an aim to expand the location points. Hence, building up the relationships with the main suppliers as “Coca-Cola”, “Nestle”, and “Mars” would positively affect the business in the nearest future and would allow us to receive products directly from the official suppliers.

• Profitability factors

1. People are in a constant need of energy due to physical strain (high demand)

2. Exceptional location (the most popular in Almaty, three huge and full-time occupied football fields with special area for fans)

3. Uniqueness of the idea (it is supposed to be the first experience in Kazakhstan)

4. Lack of potential competitors which are located near to the field

5. Football is becoming extremely popular among adults and youth

The business idea is expected to generate high profit that will allow us to expand it and equip other football fields in Almaty as soon as possible. The sources of financing could come from bank loans or other debts in order to occupy the market. Even if it seems unprofitable at a first sight, the story about Gary Yamauchi – the owner of the largest vending company in Los Angeles would be very informative. As Stevens (2012) pointed out, Yamauchi had started to develop vending business with a few little accounts doing $2000 gross per month. In a couple of months, with a help of skillful management control and interrelation with supplies as “Coca-Cola”, his profit doubled and it kept doubling; after few years, his business was on a peak of success. Nowadays, his business operates more than 600 vending machines and has annual sales of about 2 million dollars.