UAFinalMarketingPlan

Marketing Plan
BMKT 440: New Venture/Product Development

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TABLE OF CONTENTS
Executive Summary………………………………………………………………….……………. …….3
Customer and Market Needs………………………………………………………………….....4
Company…………………………………………………………………………………………5
Competition……………………………………………………………………………………...5
Segmenting, Targeting and Positioning…………………………………………….……………….…....6
Segmenting………………………………………………………………….………….………..6
Market Analysis and Trends………………………………………………….………....……....7
Targeting……………………………………………………………………….….…...………..7
Positioning………………………………………………………………………..……………...8
Marketing Strategy…………………….…………....………………………………………….…………...8
Critical Issues and Success Factors……………………...………………………………………..10
Marketing Objectives……………………………………………………………………….…..11
Marketing Mix…………………………………………………………………………..………….......14
Product………………………………………………………………………………………….14
Price…………………………………………………………………………………………….16
Promotion…………………………………………………………………………………….....16
Place…………………………………………………………………………………………....17
Implementation Schedule…………………………………………………………………….....17
Financial Plan…………………………………………………………………………………………...18
Break-Even Analysis…………………………………………………………………………...18
Sales Forecast…………………………………………………………………………………..19
Expense Forecast…………………………………………………………………………….....20
Linking Expenses to Strategy and Tactics………………………………………………….…..22
Measurable Outcomes and Controls……………………………………………………………………23
Implementation….……………………………………………………….……………….….....23
Keys to Success…………………………………………………………………………….......24
Market Research………..………………………………………………………...…….…........24
Contingency Planning……….………………………………………………...……………….26
Bibliography…………………….……………………………………………………………………....28

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EXECUTIVE SUMMARY
Our new venture offers customers a place to shop for healthy food with the quality Whole
Foods Market (WFM) is known for, but at an affordable price. We plan to take our solidly
established private brand currently sold within our WFM stores, 365 Everyday Value Brand and
create a chain of stores that solely focuses on the 365 brand.
The goal of this report is to present our marketing plan to our board of directors so they
can see an organized, detailed analysis of our new venture. The overall goal of our new venture
is to successfully launch our first 365 Market location in Cambridge, Massachusetts in the fourth
quarter of 2016 followed by an expansion the next year. The scope of this expansion will be
determined by the profitability and market adaptation of our initial launch.
As previously stated, the audience we have chosen is the Board of Directors at WFM.
The Board of Directors at WFM is made up of eleven members who have all been part of the
company for at least seven years. According to John Mackey, co-founder and current CEO of
WFM, the company plans to “keep our very successful Executive (E-Team) together for at least
another 10 years.” Mackey intends to keep the Board of Directors intact throughout WFM’s
development and implementation of 365. Because the current board of WFM will remain inttact,
it is imperative to prove to the board the soundness of our plan.
365’s goals are broken down quarterly. The annual sales goal for 2016 is $36,832,873.
Our projected sales goal for the following year is $45,955,585. The expense goals are divided up
by rent, marketing and promotion, general and administrative expenses, pre-opening expenses,
direct store expenses, relocation, store closure and lease termination cost. Our first year expenses
are projected to be $36,263,763 and our second year expenses are projected at $37,923,692.

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CUSTOMER AND MARKET NEEDS
A majority of 365’s market is made up of consumers who are health-oriented. The
healthy lifestyles they lead translates to the places they purchase groceries. They are active and
care about where their food is coming from and its nutritional value. Our target market for this
report is the Young Digerati, often associated with the everyday millennial. Like the general
market, this type of consumer focuses on living a healthy lifestyle, advances in his or her level of
education and is up to date on social media and technology advancements. The Young Digeratis
are willing to try out new products and services especially when they see a need or demand being
satisfied. A service offering like 365 stores will satisfy Young Digeratis’ needs for a new
affordable and health-oriented offering in the market.
One of the issues that WFM is currently experiencing is its reputation for being too
expensive for consumers when compared to its competitors. 365 stores wants to be a budget-
friendly version of WFM stores. However, introducing a new “type” of WFM can upset loyal
WFM customers who may prefer a high-end market with quality food. WFM needs to prove that
365 will commit to maintaining the same quality that they have been come to be known for, even
when the products are largely discounted. Another area of concern for our board of directors is
that by creating a whole new brand within the company, WFM may invest too much money that
they do not have into something that can backfire on the already declining company. On
November 4, 2015 WFM reports earnings came in and they are shockingly low. The company’s
shares are down 50% since the start of 2015. The board fears that consumers may have already
permanently labeled Whole Foods “Whole Paycheck” and the introduction of 365 stores will not
reverse this idea.

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COMPANY
365’s greatest strength is that a customer base within WFM has already been established.
It is a name that many consumers from our market are familiar with. This will give us an
advantage when introducing a new store brand. However, this strength also aligns with our
greatest weakness, which is establishing a brand image that is unique from WFM. The reason for
developing 365 is to offer lower prices compared to WFM prices. We want consumers to draw
differences between the two but still maintain a positive brand image of WFM as a company and
competitor. Entering a market like health-oriented super markets can often pose threats because
the market is already thriving with existing competitors. 365 needs to set itself apart from
existing competitors in order to gain loyal consumers. However, this also comes with the
opportunity to become established as a new supermarket and to expand WFM.
COMPETITION
Pertaining to competition, 365’s direct competitors are health-oriented grocery stores.
This includes grocery stores that focus on providing natural and organic products and emphasize
health and freshness. 365’s indirect competitors are standard grocery stores. It is important to
note that the specific stores that fall under health-oriented or standard will vary by location. For
our first store launch in Cambridge, Massachusetts our direct competitors will include Trader
Joe’s, Harvest Co-Op Markets and WFM itself, which leads to risk of cannibalization. Our
indirect competitors include Shaws and Star Market. These locations are already established in
this specific geographical region and do not serve as the standard competitor’s for 365 across the
nation.In order to grow at a rate that is consistent with our objectives, 365 is planning to provide
consumers with a wide variety of natural and organic health products. We are emphasizing the
importance of excellent customer service. All of this will be achieved along with ensuring lower

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prices compared to our competitors.
SEGMENTING
Name Size1
($ spent/yr)
Growth2
($ spent/yr)
Characteristics3
Benefits Sought
A
YOUNG
DIGERATI
TARGET
$8,400 + 4.1% ● 25 - 44 years old
● Graduate +
● High income
● Employed in
management
● Family mix
● Want best products/services
available
● Concerned with purchasing
products in relation to self-
image
B $7,500 + 0.3% ● Under 55 years old
● College graduates
● Upper-middle income
● White collar workers
● Family mix
● Health & fitness conscious
● Resources available for
healthy & high-quality
products and services
● Want to save money when
possible
C $7,500 + 0.3% ● Under 35 years old
● Lower-middle income
● White collar workers
● Mixed ethnicities
● Mostly without kids
● Price sensitive
● Select products based on price
vs. quality and nutrition
D $7,500 + 0.3% ● Under 35 years old
● Middle income
● Employed in service
industry
● No kids
● Desire the highest quality for
an affordable price
● Try to maintain healthy
lifestyles
Market Analysis
Trends in the Market: Organic Food Buyers4
1
2010 Consumer Expenditure Survey. U.S. Census. Accessed November 26, 2015.
http://www.bls.gov/cex/2010/Standard/educat.pdf
2
Calculations: ($ spent in 2011 - $ spent in 2010) / $ spent in 2010
3
My Best Segments. Claritas PRIZM. Accessed November 2, 2015.
https://www.claritas.com/MyBestSegments/Default.jsp?null
4
“U.S. Consumers across the Country Devour Record Amount of Organic in 2014.” U.S. Consumers across the
Country Devour Record Amount of Organic in 2014. Accessed November 30, 2015. https://ota.com/news/press-
releases/18061.
“Growth Patterns In the U.S. Organic Industry.” USDA ERS -. Accessed November 30, 2015.
http://www.ers.usda.gov/amber-waves/2013-october/growth-patterns-in-the-us-organic-
industry.aspx#.vlsvwrt1jsm.

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Trend Amount Risks
Sales Steady 3-4 % increase per year As sales for organic food products
increase, the acreage of places that
provide these products are overall
staying the same
Increase in Organic Produce
Demand
Fast, 12 % up from previous year
(2014)
$13B
As demand increases for organic
food products, the amount of
product remains the same and
supply becomes weaker
TARGETING
Segment Characteristics/Reason for Targeting
A ● Concerned with products related to self-image
● Spend the most money on groceries
● Higher income

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POSITIONING
Product Offering Positioning Statement
● Discounted prices
● High quality
● Excellent customer service
365 by Whole Foods provides the best customer service
among all organic food stores because we have a 4 out
of 5 star rating compared to competitors.
Perceptual Maps
MARKETING STRATEGY
In order to analyze our critical issues and success factors, we have implemented a SWOT
analysis. Through our analysis, we will be better equipped to handle the uncertainties of entering
a new market, while maximizing our competitive advantages with ease.
Strengths: Brand Recognition
We have determined that our strengths at 365 are a unique and diverse existing customer
base, who knows our brand very well and are committed to our products. We already have an
established customer base from WFM, that understands the quality and standards of our
products. These customers have become loyal to our product, as they have established a
relationship with the brand that is 365. Because of this loyalty for the product, quality and brand,
these customers will undoubtedly follow 365. As a result of the relationship and loyalty, a
footing in the Natural and Organic Foods Market has been established for 365 as well.

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Weaknesses: Brand Image and Positioning
The largest weakness that 365 will be facing is establishing a brand imagine that is
unique from WFM. Therefore, we will need to carefully create a new brand image and message
for our customers. To do so, we will need to position ourselves in a distinct and meaningful way.
Our positioning will be critical in the success of our brand. As mentioned above we plan to
position ourselves among these aspects; discounted prices, high quality and excellent customer
service. However, these are aspects that much of our competition focuses on as well. Therefore
will we need to be the best in the market on delivering these promises, in order to gain
customers, sales and growth.
Opportunities: Customer Base Expansion
Many of WFM consumer have formed relationships with the 365 brand, thus, many of
those customers will naturally be attracted to 365, as they are loyal to the brand and products.
Because of this, 365 will already have an established customer base to pull from. Additionally
we will attract new customers that were not originally WFM customers, as our values and beliefs
at 365 are different from WFM. As mentioned earlier, 365 must position itself in a distinct and
meaningful way, as our offerings, values, beliefs and message are different not only from WFM
but from the market as well. It is from the positioning of the brand that we will have the potential
to attract new customers from our competitors, as well as new customers to the market. The
potential to bring new customers to the market, and create a lifetime relationship with them, is an
opportunity for 365, that should be capitalized on in order to see long term success.
Threats: Loyalty
The largest threat that we see to 365 is the loyalty that consumers have to a given
competitor. Although there are many consumers in this market, we will need to demonstrate why

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365 is better than our competitors in order to succeed. We must do so to encourage new
consumers to come to 365, as this industry is very much driven by pre-existing favoritism to
brands. However, this can be achieved by delivering on the promises that the competitors fail to
deliver on. If this is done successfully, the potential to develop lifelong relationships and loyalty
among our customers is possible and substantial.
Critical Issues and Success Factors
The data that was collected from the SWOT analysis, can better help us determine if 365
is leveraging their strengths and take complete advantage of their opportunities. In terms of 365
strengths, brand recognition, we believe that 365 is infact leveraging this asset. WFM consumers
have and can currently purchase 365 products, therefore they know the quality and standards of
the products, which will be transposed into the core values of 365.
Now looking at 365 opportunities, customer base expansion, here too we see that 365 is
taking advantage of this asset. They are doing so by demonstrating to WFM customers the
quality of the 365 products, which has created a relationship with consumers. Therefore, these
consumers will follow the 365 products to 365 Market. Additionally, 365 will position
themselves in such a way, and deliver on promises not met by competitors, that they will attract
new customers. As long as 365 exceeds on delivering their promises made to the consumers
through their positioning, 365 will have no problem expanding their customer base rapidly.
Lastly, we examined factors that are important to the success of 365. First, 365 needs to
demonstrate the quality of their products will not be affected from the transition out of WFM and
into a new store. 365 has customers that are loyal to the brand, and will be disappointed if the
quality they have come to expect waivers. Also, the quality of the products is an aspect that 365
is using to attract new customers, therefore if the quality does not meet their expectations nor

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surpasses the quality of competing brands, these customers will forgo shopping at 365. Secondly,
it is of the utmost importance that 365 differentiates itself from WFM. Consumers must not have
the mindset that 365 is an extension of WFM but rather a whole new store with different and new
ideas, values and beliefs. This is critical to establish among consumers in the market, as it will be
a way to attract and retain new customers to the store. Third, 365 must demonstrate the cost
savings and quality of their products compared to competitors. By doing so, is the only way to
keep current customers and establish long term relationships with new customers. Lastly, as we
have stated, 365 will need to create a unique position among competitors in the market.
Marketing Objectives
In order to carry out our marketing strategy, we need to determine how we will do so.
Here we will analyze the marketing objectives, with a focus on critical issues and success
factors.
Building Blocks to Achieve Sales Goals
In order to build sales, 365 will first need to bring valued WFM customers, whom have
an established relationship and loyalty to 365 products, over to 365 Market. Therefore, they
should aim to bring at least 25% of WFM customers to their stores, in order for growth to
happen. However, 365 must be selective of the WFM customers they target at first, as they will
want the customers that will create a buzz around the store, products and brand.
The ideal customers that 365 is looking to attract are the market mavens of WFM and
more specifically of 365 products. Creating a buzz around 365 will come from positive store
experiences, delivering on promises and delighting the customers completely. If done so
successfully, the buzz about 365 will lead to positive word of mouth beyond WFM customers,
and to the consumers within the market as a whole. Ideally word of mouth should attribute to

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about 60% of our beginning sales and of our beginning customer base as well. Building off of
this, 365 will need to launch an IMC5
campaign to gain awareness of the brand to a greater
audience. The campaign should aim to inform consumers about the differences in beliefs
between WFM and 365, display the quality of the products and demonstrate the cost savings
compared to competing stores.
The launch of the IMC campaign will be regional, and limited to the Cambridge, MA
area initially. Through this campaign, 365 should expect to see customers base and sales grow by
upwards of 75%. Of course it does not go without saying that this number will be dependent on
the launch of the campaign, the channels used to carry out the campaign, and whether or not the
consumers understand the message of the campaign. Lastly, to build sales, 365 has to deliver on
quality and their promises in order to keep customer retention high. As we have mentioned, this
industry has consumers whom are very loyal to one particular brand, and with switch costs for
them being so low, they will have no problem leaving a store or brand if their exceptions and
needs are not being met.
Diagnose Reasons for Missing Sales Goals
The following explanations give us insight into potential reasons why 365 failed to reach
their initial sales goals. We have examined possible scenario and explanations below.
● Negative image of 365 that is associated with WFM
For this explanation, 365 has failed to make the distinction between them and WFM. As
we have expressed previously, this is critical to do because many consumers in the market do not
shop at WFM due to preexisting beliefs about WFM. Therefore, they will carry these
assumptions with them to 365, as this previously had been a product of WFM. Which in turn,
would lead to not gaining or attracting new customers and not achieving our sales goals.
5
Integrated Marketing Communication

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● Consumers are hesitant to try 365
Consumers may be hesitant to try 365 because there are so many competitors in the
market that have failed to deliver on their promises or messages. For this reason, consumers have
become wary to try new stores and products, only to be let down and disappointed once more.
This issue could have been avoided had the IMC campaign adequately conveyed the quality,
sincerity and values of 365 in a meaningful way.
● Consumers remain loyal to competitors
365 will lose customers, or never gain them in the first place, if they do not tell customers
why they should shop at 365. As stated, consumers are loyal to one store, and will not shop
anywhere else as long their needs are being met. Therefore, 365 failed to entice customers to the
store. This would have been achieved from creating a buzz around the brand, entrusting the help
of WFM market mavens, and launching IMC campaign about the new store.
● 365’s IMC campaign is not representative of both the value and quality of our products
A failure to communicate these benefits in a campaign will not encourage new consumers
to try 365, nor will it retain any customers who are on the fence about the store, and are not yet
fully sold on the principles of the store. The value and quality of the 365 products are the aspects
on which we have positioned ourselves on and used as a way to differentiate ourselves from the
competition. If this not received by the consumers, that we are offering high quality products at
low prices, then they will continue to shop at their current stores and not ours. Thus, we will be
facing declining sales and customer base.
Market Awareness
To increase market awareness, 365 must demonstrate that 365 products are comparable to
competitors on price, but above them on quality. This aspect is our biggest selling point, one that

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will ensure that customers of our competitors will choose 365 over them. This can be achieved
through the advertising efforts, which will need to expose customers to the value of of the store
and the quality of the products. By the end of the first campaign run, market awareness for 365
should be up by no less than 50% compared to where we started at. If this is achieved, it will be
reflected in sales, customer base size and overall growth.
MARKETING MIX
Product
Variety:
We have a large selection of products, which include, organic locally grown vegetables
and fruits. We also carry an assortment of seasonings, nuts, snacks, eggs, whole grain flours,
candy, cereal, waffles, meat, seafood, juice, coffee, dairy, condiments, vitamins, oils and
specialty items. Our meats are low-fat cut and are fresh, not frozen. We also carry cleaning
products and personal care products. We have it all; our products will assist customers with all
of their grocery shopping needs.
Quality:
We aggressively promote organically grown foods. We evaluate every product we sell
with precision and care. The foods that we carry do not contain artificial preservatives, colors,
flavors, sweeteners, and hydrogenated fats. We pride ourselves on sharing foods that taste great.
We are dedicated to providing fresh, healthy foods, which are safe to eat. We are committed to
delivering foods that supports nourishment and health maintenance.
As it relates to seafood, we have an ongoing relationship with Marine Stewardship
Council (MSC). We view MSC as the leading certification program for sustainable wild caught
seafood. MSC has high standards and they provide incentives for fishers to address key issues

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such as overfishing and bycatch. Our MSC certified wild caught seafood products are identified
with a blue MSC ecolabel. When MSC seafood is not available, we carry seafood that is either
“Green” or “Yellow” by the Monterey Bay Aquarium Watch program and the Safina Center.
We don’t sell any of the red-rated seafood that is normally found at other grocery stores. Red
ratings usually indicate that the fish is overfished or gathered in ways that are a detriment to
other marine life or habitats6
.
Additionally, our meat departments are stocked with a variety of meat and poultry from
farmers, ranchers and suppliers committed to meeting our rigid animal welfare standards. Prior
to purchasing, we make it our business to know how the animal was raised, treated, and where it
came from. Our quality standards do not allow the use of any types of hormones.
Returns:
If our customers are unsatisfied with our products, they can return it to their local 365 for
a full refund or exchange.
Price
We will continue to offer our customers Everyday Low Pricing. This allows them to
purchase items without waiting for special sales, events, or having to do comparison-shopping.
It also saves our company time and money when we do have sales promotions, as we will not
have to physically mark down our items.
Promotion
Awareness:
6
“Seafood Sustainability Basics.” Whole Foods Market. Accessed November 30, 2015.
http://www.wholefoodsmarket.com/seafood-sustainability-basics.

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We will use a celebrity to promote our brand educating consumers on healthy choices and
purchasing those items from our store. This promotion will be conducted by televised
commercials.
In-store Promotion:
We will conduct in store promotions with various items. An example of a promotion
would be, instead of listing 1 item for $1.66, we will list it on sale as buy 3 for $5.00. This
method encourages our customers to purchase 3 instead of 1. We will also conduct weekly taste
testing samples of multiple products, encouraging tasters to make purchases. In addition, we will
have a showcase of recipes, and list the isles the items can be found in on the back of the card.
Also, we will make sure our sale displays are big, beautiful, colorful and safe, so our customers
can find them easily. We will conduct weekly manager specials and temporary price reductions
on random items. This creates a sense of urgency to purchase and drives volume.
We will also partner with other brands offering customers buy one get one free, or buy
one and get a complimentary item for free.
Advertising:
Newspaper Advertising
We will place weekly flyers in the local Sunday papers for each of our stores. These
flyers will include super coupons that can be used with a minimum purchase of $15.00.
Online Advertising
Our target market of Young Digerati’s spend a lot of time on their computers. We will
run banner ads throughout the day, keep our Facebook page updated, and promote our stores on
Twitter and Instagram.
E-mail Advertising

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We will create email advertising that our customers will notice, keeping our store in front
of them.
Radio Advertising
Young Digeratis spend a good amount of time in their cars going to and from
appointments. So reaching this target through this channel is a smart way to advertise to them.
Place
Our customers will continue to purchase from us at their local retail stores.
Implementation Schedule
We plan to have this marketing plan fully implemented within one year, beginning on
January 1, 2016. Our goal is to open one store with plans to open another store the following
year depending on the success of this launch. We have partnered with Patsy Whitney, of
Coldwell Banker Prime Realty to find prime commercial retail space in strip malls. We will use
our current architect, interior decorators, facility space planners and local contractor union
workers for designing and completing the location. The store will be completed by October 1,
2016 with a grand opening in time for the holiday season. However, to monitor this success, we
will conduct weekly conference calls and or video conferencing to make changes as necessary.
Also, we have contracted with Kelly Services Employment Agency to screen, hire and train the
new employees. These employees will be in place within two weeks of opening the store.
Implementation Schedule Year 1
Initiative
Number
Initiative
Description
Q1 Q2 Q3 Q4
1. Open the store Hire a realtor Search for rental
space
Secure location
and make sure
it’s up to code
Sign lease, begin
construction and
remodeling
Open store

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2. Promotion Celebrity TV
Advertising to
Contact First Lady
Michelle Obama,
as spokesperson
Get contract
signed
Produce
commercial
Run
Commercial in
Cambridge
2. Forecasted
Results
Achieve awareness
of store
Achieve 50%
Awareness in
Targeted
Segment
3. Advertising ● Print
● Radio
Pay for Ads and
begin running
weekly
Run Print ads
every Sunday,
Radio daily
from 7am to
10am, and 4pm
to 6pm
Continue
running Ads
Continue
running Ads
3. Forecasted
results
Increase Sales Achieve 25%
Sales increase
If our sales goals are successful in year one, we will use the same implementation schedule to
open a second store in year two.
FINANCIAL PLAN
Break-even Analysis
You can see our revenues and costs for the investments below. This gives us a good summary of
expected cash flows in the near future.
Figure 1: Expected Results
Figure 2: Expected Cumulative Results
As you can see in figure 2, 365 is making money in Q2, and we break-even between Q3 and Q4
of year 1. We are doing our second investment in Q1 year 2 and since the average rental amount

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is only $604,010 it doesn’t affect the operating income much. After Q4 year 1 we see that
operating income increases steadily, which implies the investments are profitable.
Sales Forecast
We are focusing on the Young Digerati segment, because they are the most profitable
segment to maximize future profits. Since we are entering a new market, Cambridge, we used
previous numbers in our analysis, because those numbers are a good guideline for future cash
flows.
The whole segment, Young Digeratis, includes 1,555,400 people, and we have predicted
that 28% of this segment will purchase our products and increase sales. According to our
research, we found that our segment spends around $8,400 a year, which indicates our sales will
be $3,658,300,800 the first year. This is the total sales for the whole company, and we divided
that amount by 400, as we currently have 399 stores in various locations and adding the new
store to open in Cambridge. In year two, we divide all numbers by 401, since we are calculating
sales and costs for 401 stores instead.
We expected a sales growth by 12 % last year and we can still see that the economy is
recovering from the financial crisis of 2008 and 20097
. For this reason we are expecting the
same growth rate for the next 2 years. We also expect sales growth because we see a continuous
demand for healthier food on the market, and involvement from the Food and Drug
7
https://ota.com/news/press-releases/18061

20
Administration with concerns about calorie intake. We assume that the economy has reached a
stable level year 3, quarter 1, which explains the steady growth rate by 4 %8
. You can see the
sales forecast below, and since we use quarters we have to divide the growth percentages by 4.
Since we are entering a new market, our goal the first quarter is a total of 75% of our normal
sales, which explains the lower result Q1.
Expense Forecast
The expense forecast is a statement of our operating expenses over the next two years.
All results are based on a sustainable inflation by 3 % and since we want an overview over the
next 8 quarters we have divided all percentages by 4 to get a realistic view of the changes. Most
of the numbers are based on averages of the company’s result over the last five years.
Total Rent Cost:
The rent cost is the biggest expense for 365 and that is because we assume that we rent all
the facilities because we are not established on the market yet. The new investment will be made
in Cambridge since that is a profitably place to open a new store and the city has a good growth
potential. The average rent per store is $604,010 and we assume that the rent for each store will
be this amount. The plan is to rent 1 store in year 1 quarter 1 and another store year 2 quarter 1, if
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industry.aspx#.Vlz_goSq_RZ

21
the first investment shows to be profitable. In the matrix below, and in our 2-years-plan, we have
based our calculations on two new investments and store openings in Cambridge.
Cambridge has a rental increase by 5.2 % each year and we have taken this into account
when we made our calculations9
. We have also divided the percentage by 4 as we want the
results on a quarterly basis. Total rents in the beginning of year 1 quarter 1, are $151,003 and
you can see below how the two investments and the rental growth affect the next two years for
365.
Year 1 Q1 Q2 Q3 Q4
Total rents +
rental growth
$151,003 $154,954 $156,968 $159,009
Year 2 Q1 Q2 Q3 Q4
Total rents +
rental growth
$332,152 $326,340 $305,931 $334,880
Marketing/Promotion:
365 is investing less in paid media compared to other supermarkets and are more
concentrated on using social media as promotion or a marketing tool. As mentioned earlier in the
report, we will use Michelle Obama as a marketing spokesperson and will offer her $1,000,000
each year for representing 365. We will also invest in newspaper at $50,000 a year and radio
advertising at $25,000 a year. If we add this up we will have $1,075,000 in total advertising
expenses and if we divide the amount by 4 we will get $268,750 each quarter plus the inflation
rate.
General and Administrative Expenses:
General and administrative expenses includes all kind of administration and general cost
9
http://money.cnn.com/2015/05/21/real_estate/rent-prices-rising/

22
that 365 has. The average is $360 million for the last 5 years and we assume this amount when
we are estimating future general and administrative costs, but we are dividing the amount by the
total number of stores.
Pre-Opening Expenses:
Pre-opening expenses are costs that we will have when we open a new store. The average
is $49 million for the last 5 years for the company, and we will use this amount when we
calculate future pre-opening costs, and we are dividing the amount by the total number of stores.
Direct Store Expenses:
Direct Store Expenses are costs that can be linked to our stores. The post includes, for
example, materials, labors and other expenses that are linked to a special product or a store10
.
The average is $2.972 million for the last 5 years and we apply this amount in our matrix and
divide it by the total number of stores.
Relocation, Store Closure and Lease Termination Cost:
Relocation, store closure and lease termination is the smallest amount in our expense
forecast and the average is $10.4 million and this is what we have used in our estimates and
dividing the amount by the total number of stores.
All of the numbers in the matrix are multiplied with the steady inflation rate by 3% each
year, which explain the growth expense each quarter.
Linking Expenses to Strategy and Tactics
We assumed that 365 rents all of their facilities and that is why the rental cost are
10
http://www.investopedia.com/terms/d/directcost.asp

23
relatively high. One reason for renting instead of buying the facilities is, we want to be sure the
market accepts and adopts our concepts before we invest in fixed assets. Furthermore, as
mentioned earlier in the report, we are investing less in paid media compared to other
supermarkets and are focused on the use of social media as a promotion or a marketing tool. Yet,
our plan is integrated as we are using some paid marketing which includes, print ads in the
newspaper, radio advertising and Michelle Obama as our representative of 365.
General and administrative expenses, Pre-Opening Expenses, Direct Store Expenses,
Relocation, Store closure and lease termination cost are based on an average over the last five
years and the biggest post in our forecast is Direct Store Expense. The post, as mentioned before,
includes materials, labors and other expenses that are linked to a special product or a store.
Additionally, the number is based on the total amount that the company spends in their existing
stores plus the new store we are opening in Cambridge divided by the total number of stores.
Another explanation why this sum is large is we invest heavily in service and we want to create
an illusion of an exclusive store/stores, which also is based on our targeting.
MEASURABLE OUTCOMES & CONTROLS
Implementation:
Objective Number General Objective Cost Forecasted Results Return on
Investment
1 Advertising
Campaign: TV
commercials
featuring celebrity
endorsement by
Michelle Obama
$5,000,000.00 1,000,000 people
gain a positive
awareness of 365
$5 per person who
gains a positive
awareness of 365
2 Advertising
Campaign: TV
commercials
featuring celebrity
endorsement by
Lindsay Vonn
$2,000,000.00 500,000 people gain
a positive awareness
of 365
$4 per person who
gains a positive
awareness of 365

24
3 Advertising
Campaign: TV
commercials
featuring celebrity
endorsement by
Carrot Top
$750,000.00 100,000 people gain
a positive awareness
of 365
$7.50 per person
who gains a positive
awareness of 365
Keys to Success:
Our paramount priority is to demonstrate to our target segment, the Young Digerati, that
we are the destination for healthy and quality yet affordable food. We will prove this by
successfully offering an exceptionally high quality product at startlingly reasonable prices. We
will accomplish this by:
1. Never sacrificing the quality of our product for any reason.
2. Leveraging the knowledge be have gleaned through years of successfully growing WFM
to move into the future with the a fresh, new offering.
3. To limit cannibalization, we must successfully differentiate the new 365 from the existing
WFM stores.
Market Research:
In order to begin and remain successful, 365 must faithfully monitor the world around it.
We will actively scrutinize:
1. The successes/failures, trends, and innovations of our main competitors:
a. Trader Joe’s
b. Harvest Co-op Markets
c. Shaw’s Market
d. Star Market
e. Costco
f. Local health food co-ops

25
g. Local farmers markets
2. Trends in the health food industry by monitoring:
a. The Sustainable Food Trade Association
b. Organic Trade Association
c. Food and Beverage Trade Association
d. Natural Products Association
3. Economic indicators of the health of the nation and the world by monitoring:
a. Gross Domestic Product
b. Consumer Spending
c. Unemployment reports
d. Trade in Goods and Services
e. International Investment Position
Contingency Plans:
Objectives: Problems Contingency Plan
If our celebrity endorser’s reputation is tarnished and
out brand then becomes tied to a negative figure.
We will immediately sever ties with the celebrity (as
per our contract) and will quickly recruit a new face of
365.
Our planned TV commercials prove to be ineffective at
swaying our target market’s opinion of 365.
We will quickly evolve our promotional plan to adopt
another form of advertising. Our 2nd choice of vehicle
for our advertising is online.
Due to financial hardship, our promotional budget is
dramatically slashed.
In response, we will replace the celebrity endorser with
a more affordable focus on regular consumers in our
promotions.
Likely Scenarios: Problems Contingency Plan
We fail to attract new customers and end up
cannibalizing WFM to get customers into 365.
Force more extreme differentiation, even if it slows the
success of 365. We do not consider a thriving 365 and a
dying WFM a success. We consider a thriving 365
Market and a thriving WFM a success.
Despite our best marketing efforts, our target segment,
the Young Digerati, fail to embrace our store.
We are prepared to shift and tailor our marketing plan
to accommodate the next most profitable segment.
Sharp downturn in the economy leads to a general Along with working hard to cut costs and thereby lower

26
reversal of the healthy eating trend. People become so
focused on cutting down on their grocery bills that they
sacrifice healthy food in order to reduce spending.
costs, we could introduce a second brand which would
be a lower quality and price point. This brand would be
distinctively different from 365 so our flagship brand
does not suffer from a perception of reduced quality.

27
BIBLIOGRAPHY
Annual Report 2014. Whole Foods. Accessed November 30, 2015.
http://assets.wholefoodsmarket.com/www/company-info/investor-relations/annual-reports/2014-
WFM_Annual_Report.pdf.
“Direct Cost Definition | Investopedia.” Investopedia, 2003.
http://www.investopedia.com/terms/d/directcost.asp.
“Growth Patterns In the U.S. Organic Industry.” USDA ERS -. Accessed November 30, 2015.
industry.aspx#.vlsvwrt1jsm.
My Best Segments. Claritas PRIZM. Accessed November 2, 2015.
https://www.claritas.com/MyBestSegments/Default.jsp?null
Rents in April were 4% higher than a year before. “Rent Prices Are Soaring.” CNNMoney. Cable News
Network. Accessed November 30, 2015. http://money.cnn.com/2015/05/21/real_estate/rent-prices-
rising/.
“Seafood Sustainability Basics.” Whole Foods Market. Accessed November 30, 2015.
http://www.wholefoodsmarket.com/seafood-sustainability-basics.
“U.S. Consumers across the Country Devour Record Amount of Organic in 2014.” U.S. Consumers
across the Country Devour Record Amount of Organic in 2014. Accessed November 30, 2015.
https://ota.com/news/press-releases/18061.

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