Residents and their tastebuds

ENGAGING SASKATOON’S ONLINE-SAVVY

RESIDENTS AND THEIR TASTEBUDS

Business Plan Submitted By:

Stephen Leask

Arvind Kumar

Stephanie Hughes


Executive Summary

Gelato Mobile is a new and innovative way to market and sell gelato to Saskatoon. Gelato Mobile is exactly what the name implies: it’s mobile, and offers delicious gelato to customers all over Saskatoon. Gelato Mobile will offer 12 flavours of gelato on any given day. The location of Gelato Mobile will depend on events scheduled around Saskatoon, as well as any high pedestrian traffic areas that appear attractive and conducive to sales. The mobility factor of this business plan is one of the key advantages. Gelato Mobile offers convenience and a unique purchasing experience to its customers. By targeting events and high traffic areas, consumers can purchase a great product without having to make a separate trip to a given location.

One of the key factors in this business plan is the marketing and promotion of the business. The marketing is heavily based on a newer concept referred to as “social media”. This type of marketing, which relies on the internet and mobile communications, has been rapidly increasing in popularity over the past few years. The ability of the business to use social media marketing techniques is almost as important as the product the business sells. Gelato Mobile is not only selling Gelato, but an experience. Consumers will be actively engaged in the sales process. Gelato Mobile will capitalize and promote social media techniques in an effort to capture market share in Saskatoon.

Start up costs for Gelato Mobile will be about $6,000. Each of the 3 owners will contribute to this evenly. This capital will be used to purchase initial inventory and help with expenses occurred in the first month. No debt funding will be required due to the small size of the business operation. Should the business require more capital, each owner will contribute evenly. Based on the financial projections calculated, Gelato Mobile will be profitable, averaging an annual net income of about $8,813 over the next five years, based on an annual increase of 5% in sales.

Strategic use of social media marketing, careful cost control, and a fantastic product should enable Gelato Mobile to be a successful small business opportunity.

Table of Contents

1. Introduction

1.1 Food Industry, Social Media Phenomenon & Social Media Marketing

As in any food service establishment, ice cream places usually warrant about a 70% gross margin, with an average ticket per person of $3.00-$5.60.¹ In addition, start up costs can range from $50,000-$250,000 depending on location and equipment, and fixed costs usually depend on square footage.² Typical of Saskatoon food establishments, more than just the quality of the food is key: it’s the atmosphere, cleanliness, and customer experience that contribute to a successful business.³

As for the Mobile Food Services industry, a 2006 Industry Canada Small Business Profile indicated 1230 businesses in Saskatchewan.⁴ Saskatoon’s portion of these businesses is approximated at 253⁵ (21%, assuming there is a correlation between high concentrated population areas and number of businesses). From the report (see Appendix G), 79.2% of the businesses are profitable, showing a net profit of 19.2% of total revenue.

Social media marketing, the basis of Gelato Mobile’s marketing, and business, strategy stems from social media. Since it is relatively new and ever-evolving, a clear definition of social media does not truly exist. However, social media can be defined as the “editor-less content prioritized by popularity”⁶, “information content created by people using highly accessible and scalable publishing technologies [. . .] intended to facilitate communications, influence interaction between peers and with public audiences [, . . .] typically done via the Internet and mobile communications networks.”⁷ Also, social media “most often refers to activities that integrate technology, telecommunications and social interaction”⁸ with [t]his interaction, and the manner in which information is presented, depends on the varied perspectives and "building" of shared meaning among communities, as people share their stories and experiences.”⁹

Visit the following link for a You Tube video that explains “Social Media in Plain English”, using ice cream production as an analogy for social media:

http://www.youtube.com/watch?v=MpIOClX1jPE

The social media phenomenon has caught fire in the past few years, and is now being adopted by a variety of businesses to reach and engage customers. In the past year, “consumers’ use of social media grew 48%”¹⁰ and “49% of consumers [interviewed] who use the Internet technology do so at least once a day.”¹¹ This ever growing use, and repetitive use, makes an attractive two-way channel to reach people; in fact, “61% turn to social media when researching potential purchases, with 31% saying they find the online sources more credible than advertising.”¹² Businesses have now caught on to exploiting social media which has led to the term social media marketing to be dubbed. Social media marketing is “[u]tilizing social networking and user-generated content platforms to promote a product, service or content [which] [o]ften involves creating and participating in a dialogue with the target audience, rather than forcing an advertisement upon them. [. . .] When approached properly, social networks can be extremely effective channels for building product evangelism, reputation management or corporate branding.”¹³