Healthy Life Group Case Study

Healthy Life Group

This report is consistent with my signed Academic Integrity Form on file with the instructor.

Name: Karim Afilal (100279147)

Team: Group 4

Date: November 8, 2016

Definition of Success

In order for Healthy Life Group (HLG) to develop a successful business, Heather Larson must earn a profit of $50,000 in the first year of operations and grow profits by 20 percent each subsequent year.

Critical Issues

1. Must use valuable network contacts to enter the Canadian market and capitalize on growing economy.
2. How to increase Canadian consumer awareness of this healthy alternative.

Decision Criteria

In order for Larson to pick the right strategy for Healthy Life Group, she must evaluate her options based on the following criteria:

1. The strategy must provide the company with the opportunity to expand to grow profits every year.
2. The strategy must provide the company with the opportunity to promote healthy lifestyles for their consumers.
3. The strategy must allow the company to begin operations on January 1, 2011.

Option Analysis

Option #1: Strategic Alliance with Loblaws

The projected sales with a strategic alliance with Loblaws would be $ 178,910.50 and the gross profit from these sales would be $ 125,237.35 in year one (See Exhibit 2). The fixed costs that will be involved in this option would be $62,280 which will yield a net income before tax of $62,957 (See Exhibit 2). This option will meet the decision criteria of meeting the target income of $50,000 in year one. The risk involved in this option is that the consumers of Loblaws products will not be willing to try this new product because they are already used to purchasing the same product without the Nutrifusion product inside of it. HLG will have to work with Loblaws to ensure there is enough marketing and promotions around these new products to be able to hit the projected sales numbers stated above. These marketing campaigns will have to continue after the first year of sales to ensure repeat purchases from the consumers.

Option #2: Launch Nutrifusion Product in Supplement Retail stores.

HLG can approach Canadian supplement retail stores and market their products to be sold at the various supplement stores. The Canadian supplement industry is expected to grow to a value of $2.75 Billion by the end of 2010. ^[1] HLG can capitalize on this growing market by entering supplement stores throughout Canada. If HLG is able to enter this distribution channel, they will have to sell 4465 units to achieve a gross profit of $125,000 (See Exhibit 3). The risk in implementing this option is that Larson does not have connections with these supplement stores and will have to convince these stores to sell her products.

Option #3: Launch Nutrifusion Online  

HLG can create an online outlet where consumers can purchase their products from their website. By implementing this option, HLG will not have to sell their products at wholesale prices and will have greater profit margins because they are cutting out the retailers. For this option to succeed, HLG will have to have a larger marketing budget to bring awareness about their products because they will not be available in retail stores. 15% of her sales will be dedicated to the Nutrifusion marketing budget.   Larson will have to hire a marketing firm to create a social media presence for Nutrifusion and have popular Canadian fitness Youtubers become brand ambassadors for Nutrifusion. By having a greater social media presence and having brand ambassadors in the fitness industry, HLG can expect a net income of $ 140,176 by selling 5000 units of Nutrifusion in one year or 14 units per day (See Exhibit 4).