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VAPOMANIA
Course : MGT206
Title : Business plan for Vapomania
Acad. Year : Fall Semester 2015
Instructor’s name : Hadjimanolis Athanasios
Students’ names : Giannoulis Ioannis and Bogdan Lazurenko
Submission date : 14/12/2015
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ABSTRACT
During the course “Small Business Management”, two students Giannoulis
Ioannis and Bodgdan Lazurenko have decided to conduct a business for a non
real company named Vapomania. Vapomania is a limited partnership which
import and sell to every who is interested vape, the liquid for electronic
cigarettes. On the following pages it will be examined thoroughly some key
aspects of the company, which of course must be embedded in every business
plan.
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TABLE OF CONTENTS
I. History and background...............................................................................4
II. Definitionof business.................................................................................4
III. Objectives andGoals.................................................................................5
A. Profit Plans........................................................................................5
B. Marketing Plans.................................................................................5
C. Quality Control Plans .........................................................................6
D. Financial Plans...................................................................................6
IV. Definitionof the Market ...........................................................................7
V. Descriptionof the product........................................................................9
VI. SWOT and PESTEL DG Analysies ...............................................................9
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I. History andbackground
The VapoMania will be a limited partnership between Bogdan Lazurenko and
Ioannis Giannoulis. These two individuals are students of EUC both on
bachelor degree with business related subjects. Personal and business
experiences of both will be utilized in order to benefit effectiveness of
business operations.
The initial idea of opening this trading unity was developed from the market
opportunities which are provided in electronic cigarettes sector in Cyprus
area. These opportunities are:
• Trend among students towards switching to electronic cigarettes from
smoking cigarettes. Market will grow rapidly due to the early stage of
trend developing.
• Underdeveloped marketing procedures of potential competitors.
• Relatively high cost of competing products and low quality of low cost
segment.
No physical facility will be created. Potential customers will be getting
information about the business through various promotional mixes but mainly
will be concentrated at the company’s website while the sales will be done
through personal selling practices. EUC is seen as a primary place of
concentration of customers for this business. Other universities of Cyprus are
seen as secondary and will be covered with later development of business
network. The mission of VapoMania is to help student vapers to enjoy more
from their electronic smoking devices by providing them low on cost but high
in quality liquids for their devices with the tastes they like.
The income received from business operations will be secondary income
sources standing after parental money support.
II. Definitionof business
Recent researches show that more than 600.000 people in Cyprus are
continuous smokers. Due to technological development new generation of
electronic cigarettes is now available in Cyprus. And due to global ‘healthy
lifestyle’ trend Cyprus now is showing great interest in e-cig related products.
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And here we state that VapoMania will help student-vapers to get the e-cig
liquid which was designed to fit their preferences in taste, quality and smoking
device they use with an affordable price.
III. ObjectivesandGoals
The prime purpose of the company is to provide to its customers high quality
products and services at a highly competitive price in the market, thus
maximizing the customer satisfaction
A. ProfitPlans
The company’s goals will be to maximize profits through efficiency and
effectiveness of the operations. Moreover, it must be mentioned that for this
enterprise it is not needed big building infrastructure e.g. buildings,
warehouses etc. The product can be stored to the house of one of the
members of the company, given that it does not need much space. This
practice will minimize the overhead costs and hence it will lead to high
marginality of the product and will speed up return on investments as well.
Β. Marketing Plans
Main promotional medium will be target marketing strategy through various
social media. The study of Facebook, LinkedIn, Instagram and Vk.com
communities (self segmented to the e-sig area of interest) shown that there
are at least 10 communities in Cyprus with actual total number of followers
over 100.000. These potential customers will be reached through various
promotional mixes and PR actions in Social Medias.
Other side of target marketing will be promotional and sales campaigns which
will be done first in EUC but then will expand to other Cyprus universities with
the purpose of creating initial pool (or population) of the potential customers
and the following step will be actual selling by personally contacting these
people.
The "promo-pack" option will be created for customers for a short term
launch period allowing them to buy 4 different tastes together with the price
lower than 1pc price multiplied by 4. This will help to create better liquidity in
business and will bring customer attention.
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C. Quality ControlPlans
Through the establishment and the implementation of quality standards e.g.
ISO to the production line and the distribution, through compliance to the
rules of the EU and through the establishment of an interactive
communication with customers, where they can express opinions and
concerns, the company hopes to provide a product of excellent quality and
narrow the gap between client and company's decision makers.
D. Financial Plans
Budget for the first month of operations:
CATEGORY DESCRIPTION AMOUNTS
REVENUES
Sales "promo packs" (consist of 4 30ml
bottles) - 200x20 (selling price)
4000 euros
200 1pc-selling bottles - 200x7
(selling price of 1pc)
1400 euros
TOTAL REVENUES 5400 euros
COST
Initial inventory 1000 bottles of 30 ml e-liquids -
1000x3
(3000 euros)
Sales and promotional
expences
100 bottles of 10ml e-liquids
(promo merchandise) - 100x1.65
(165 euros)
Business cards Creation (design+production) (50 euros)
Advertisement expenses Liflets and catalogues
developement
(100 euros)
Website creation The online presence of the company (150 euros)
Logistics and delivery of
inventory expences
(100 euros)
VAT 19% of purchasing price (570 euros)
Unexpected expences
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and "crisis money" (1000 euros)
TOTAL COST 5135 euros
TOTAL BUDGETED
PROFIT
5400-5135 265 euros
Second month budget will be developed based on the results of the first
month. This will help us to be flexible in terms of termination because with
this business having low fixed initial costs it allows it to break even after first
stage of selling.
IV. Definitionof the Market
This is a really promising market for several reasons. At first, there is a highly
increasing demand for this particular product, given that electronic cigarettes
tend to replace the conventional ones (approximately 10% of EUC smokers
use electronic cigarette and 30% of smoking population in Cyprus). Needless
to say, the rate of smokers in Cyprus is high. Moreover, it is observed a really
undeveloped network of distribution of vape in Cyprus and at a non
competitive price, fact that encourage us more.
Customers
The target market is firstly the EUC smokers, given that we are students there
and it is easy to build a distribution channel and more close relations with
them. At this point, it must be clarified that the plan is both to sell ourselves
as common retailers and to attract salesmen in later stages
Typical consumer of our product - is a student who enjoys vaping, no other
variables (like age or other lifestyle variables) are taken to account.
Competition
As it is already mentioned , the existing competition is only some retailers.
The channels of distribution are very poor and undeveloped. However, there
are some strengths and weaknesses that we should examine.
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Competitors’ strengths
• They know well the area and the hot spots , where there is
interest of selling vape
• They have created strong relations with the buyers
• They are locals and so people more willing to trust them
Competitors’ weaknesses
• Undeveloped network of distribution (sales done in one
physical shop)
• Poor quality of competing products
• Underdeveloped promotional base
Subtitutes
No substitudes for the product we proivide are around because as it comes
from the customer definition - this business is going to serve consumers who
are already have devices specifically designed for our type of a product.
Power of Suppliers
Supplier has big impact upon efficiency of business operations. But because of
friendly personal relations between us supplier can be named reliable and
comparobly stable. Dangers from supplier's unstability are nivilated by
flexibility of the business model.
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V. Descriptionof the product
VapoMania will offer its customers wide range of high quality electronic
liquids
First brand which company will launch and promote is“RoyalVape”. It’s new
brand which was created in Ukraine by the Subohm Store company.
Actual product range consists of liquids of different tastes (based on
customer’s preferences) with different production formulas for every vaping
device type as “tank”, “ego” and “dripper”. This unique approach will help
our customers to fit their actual needs for the specific type of a liquid.
VI. SWOT and PESTEL DG Analysies
In this part, it is important to examine thoroughly the key elements that affect
this business through these two analysies
Strenghts
• Good quality of product
• Highly competitive price
• Low business risk
• No big financial riscs
• The company consists of young,
eager to work people with big
amount of time avaliable for
busioness puposes.
• Unique in this sector marketing
and selling approaches.
Weaknesses
• No previous business experience
• Limited financial funds
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Opportunities
• There is a highly increasing
demand for this particular
product
• The rate of smokers in Cyprus is
high
• Undeveloped network of
distribution and low quality 0of
low price sector
Threats
• Supplier's environmental
unstability (crisis in Ukraine)
• Tax and legal issues (no special
taxes or obligations engaged in
Cyprus for this specific type of a
good but it can happen)
PESTEL DG Analysis
Political factors:
First and foremost, Cyprus is a presidential republic. The head of state and of
the government is elected by a process of universal suffrage for a five-year
term. Moreover, Cyprus is one of the 28 members-states of the European
Union. For all these aforementioned reasons, it could be said that in this
country there is political stability, conducive to entrepreneurship. However, it
can not be ignored the Cyprus dispute, namely the fact that the island is
divided by the Greek-Cypriot community at the South side of Cyprus and by
the Turkish-Cypriot community at the North side of Cyprus, after the Turkish
invasion in 1974.
Economical factors:
Cyprus has been affected by the recent economic crisis, but the time being it
seems to return slowly to growth. More specifically, according to the annual
budget of the state, the growth rate is estimated to be 1,4% for the 2016.
Cyprus is famous for its low tax rates and that is why many businesses are
established in Cyprus. Needless to say, Cyprus’ currency is euro since 2008,
fact that provides it, at some point, safety from fluctuations at exchange rates.
Last but not least, economically Cyprus can be stated as being stable in its
crysis.
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Social factors:
As for the culture, Cyprus has many similarities with the Greek population, for
instance in art, in language, in religion, in the ancient civilization etc. What is
really remarkable is that Greek-Cypriots and Greeks have the same national
anthem. However, given that the island was under British Empire for many
years, Cyprus has been influenced by the British way of life, eg the left side
driving, the English accounting system etc.
Technological factors:
Unfortunately, according the regional yearbook of Eurostat, Cyprus spend only
0.50% of R & D Activity. This can be explained from the economic recession
that affect Cyprus, but it must be mentioned that EU offer many funds to the
member states for the fields of R & D and Innovation and therefore each
enterprise can following the appropriate procedures absorb these funds.
No critical technological issues affecting this type of a business are present in
Cyprus.
Environmental factors:
In Cyprus the climate in Cyprus is quite good. There are some fluctuations in
tempetature eg heat at the morning and cold at the evening, but this is not a
issue to worry. Furthermore, it can not be neglected that tourism in Cyprus is
really at high rates. Last but not least, there are strict regulations from EU for
the protection of environment eg recycling, air pollution etc that are
implemented in Cyprus, as a member state.
Legal factors:
From 2004, Cyprus is part of the European Union and therefore it has
integrated in its legislation the community law. Primary law of EU and any
decisions( eg directions) arising from it are binding on all member states. One
really important issue for businesses in EU is the free movement of people
and capital within the Union, namely without any supplementary tariffs
imposed by each state.
One of the possible threats is a possibility of creation of various obligatory
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papers (like licences) or new taxation schemes which can affect businesses
profitability. But for now no sign of such is around.
Demographic factors:
According to the last population census conducted by the Statistical Services
of Cyprus it is observed a decrease in the population of Greek Cypriots from
858. 000 the year 2013 to 847.000 the year 2014.
Source (http://www.mof.gov.cy/)
Global factors:
It is obvious that the events around the globe clearly affect all countries and
Cyprus, as well. Issues in the macroeconomic environment e.g. the economic
crisis, the climate change, the immigration problem, the war in Syria etc are
really considerable issues, which must be examined further but for now they
are still have little impact on the effectiveness of operations of this particular
business.