April 21th 2015 (amebded)
The decisions has been made on how to proceed with GNGR. After lengthy discussions with our marketing contacts who have reviewed our company and what we have done in the past the following was brought to table as the best way to move forward.
Our consistent product that has sold over and over year after year was our gold box fudge. With repeat sales that continue to show that expanding on that line will be key to our success. Next and most importantly was our marketing deficiencies. After being shown figures and data about our promotions and sales during an entire year, I was given data that clearly shows that trying to sell fudge and chocolates on holidays such as Valentines day and Easter via the inter net was a complete waste of time and capital resources.
The outcome of the meetings are that GNGR should use the marketing resources and focus on FUDGE for the Holidays (October Through January) where the gift giving sales are greater then all other holidays together. People are 98% more likely to purchase items on line as gifts from Thanksgiving to New Years and also purchase multiple as compared to only one person buying one box of chocolate for Valentines day for a single loved one. We were shown sales of Mallow Mars cookies that seem to only be available during the holidays as well.
Producing 1000 fudges per day this September would yield about 30,000 fudges and can be done easily with our crew of 5 people and equipment. A special retail price of $12.99 would be in line with a great value and equate to sales of around $400,000 for just those three holidays. If more is needed we will be at the ready. And the following year we would produce the same 30,000 but in August and another 30,000 in September as needed as sales increase to $800,000 for the season.
The fudge will be marketed months prior with the delivery to be assured to arrive at or before Thanksgiving, Christmas and New Years. This will also allow us to manufacturer the fudge between July, August, September and have inventory ready to ship with the ability to make more as needed to fill in any additional orders and also replace sold stock. After Those holidays we will issue a special email to all who purchased product with special deals on any remaining fudge in inventory.
Advertising capital will be used to market only fudge for those months not year round. Similar to the way Cadbury advertises the chocolate egg for Easter, one product can achieve more with marketing than an entire line year round. We will create a special holiday ONLY label so that we can sell to retail chains with the same (get it NOW before their gone) and once gone people will have to wait till the next year. This can generate substantial sales far more then trying to market year round where people really are not looking to spend on holiday gifts as people know and get used to buying our fudge only when available.
Special pricing for wholesale (grocery and other chain stores) will be given with additional discounts if those locations add our product into their advertising circular or literature. Because GNGR has a very low cost to product the fudge, we can give a rebate or advertising budget. This practice is done by Poland Spring water and other suppliers to BJs, Costco, Target and most other large chain stores. We will be on the same playing field as those larger companies by offering the same programs they offer. I have no problem generate sales with a strong net profit per unit after wholesale pricing and additional discounts as long as our volume increases we will do very well on volume.
A point to mention: When we did the annual Oyster fest where we sold our fudge, we asked many people why do they not come to our retail store and the most answered response was "they only buy our fudge here each year and look forward to that". I guess it makes sense to sell something so well received that tastes great with out over saturating the market creating a demand and also a fan base for our product.
Simply put: people don't buy Easter bunnies or Valentines day chocolates in masses on the inter net and certainly not for Halloween. Our retail stores had their share of sales from walk in traffic but not enough to be consistent with a public companies sales.
This will be the way we grow quickly and use our time and capital for marketing to those specific holidays where most of our sales over the years came from as well.
I will be finalizing the letter to shareholders this week, meeting the accountant as well and planning our marketing for the October to January sales program.
Once this is in place and structured we will eventually offer some other items such as additional holiday chocolates for just those three holidays.
This makes sense to me and also somewhat a relief that we can focus on one item and only for the 3-4 months where 98% of our sales will come from. I did mention that I do want to offer the fudge with the gold silver program separately because I do not mind keeping our fudge available year round, we just don't focus on massive national sales other than October through January..
The numbers look accurate, I love the idea of focusing our marketing during the winter holidays only, allowing us to use the summer to refocus on what to add to the line or just get ready to produce and inventory what we will need that year. I like this plan moving forward and not rushing each day to send out 2-8-12 fudges in dribs and drabs.