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1. Case Analysis: By-the-Sea Biscuit Company
ADV 388K
Integrated Communication Management
[Group 6]
Zachary Bodner (bodnerzd)
Alex Hart (amh6375)
Xing Liu (xl5525)
Darya Procopovich (dp28353)
Emma Szyller (es34345)
The University of Texas at Austin

2. By-the-Sea Biscuit Company Group 6 Case Analysis 2
Situation Analysis
Macro Environment
Company Analysis
Paul Finney and Pat Jobe, long-time friends and future business partners, are proposing the
launch of a frozen biscuit business venture in Clearwater Seafood plant in North Sydney, Nova
Scotia. Cape Breton Innovation and Research Council (CBIRC), a private corporation, had
recently assumed ownership of the plant and wanted to expand and develop local business by
accessing new technology, new ideas, new products, and new markets. In August 2006, Finney
and Jobe presented a business proposal to CBIRC and the organization was very enthusiastic and
believed the idea had potential. Finney and Jobe, although convinced of the merits of the product
concept, still had some questions that needed answering before they could make a final
assessment on the viability of the business. Both had full-time jobs and the decision to leave to
pursue this business was not a decision that could be made lightly.
Demographic Environment
The population for the three target regions are:
o Atlantic Canada (particularly New Brunswick, Nova Scotia, Prince Edward Island
and Newfoundland): 2,285,729
o New York State: 18,976,457
o New England (six New England States): 13,922,517
Within these populations there is a shifting trend toward the single-person household and a
growth in the number of on-the-go consumers. Thus, two potential target demographics are the
single-moms who need a healthy, easy to make alternative and those looking for a quick, on-the-
go breakfast alternative.
Economic Environment
From an economic standpoint, the fluctuating currency exchange rates have an important impact
on By-the-Sea Biscuit Company’s ability to sell to the U.S. markets. Recently, the Canadian
dollar was gaining strength and as of January 2007, the U.S. dollar was valued at $1.16 CAD.
Technological Environment
The traditional bread baking method results in a short product shelf life, however, by 2006,
natural additives allowed manufacturers to produce frozen dough that was comparable in quality
to homemade dough. Critical to this production process is the need to employ a rapid freeze
method to minimize yeast fermentation during dough preparation.
Competitive Environment
According to a report by Statistics Canada, there are 140 companies listed in a directory called
“Company Directory for Commercial Bakeries and Frozen Bakery Product Manufacturing
Facilities.” Of these 140, only 23 were involved in frozen or partially baked manufacturing. Four
of these were located in New Brunswick, and 1 in Nova Scotia. In the U.S., Canada Bread
Company Limited is the chief competitor, with 50% of the U.S. market share. Finney and Jobe
identified no current competition for frozen biscuit production in Atlantic Canada.

3. By-the-Sea Biscuit Company Group 6 Case Analysis 3
Product Environment
From 1998 to 2006, the retail value for bakery products produced in Canada had increased by
44%. In 2004, the Retail/Wholesale Biscuit and Bakery Market was estimated at $6.3 billion
with the average Canadian household spending about $536 annually in this category. In 2005, the
total value of bakery exports to the U.S. was $545 million. This figure did not include frozen or
partially baked products.
In the U.S., a 1997 report stated that, “biscuit dough accounts for 41% of refrigerated/frozen
dough product sales. Biscuit dough sales are expected to have an increase of 6.5% annually, with
forecasted sales of $3.2 billion by the year 2000.” In contrast - Finney and Jobe did not find
much data (besides anecdotal) to accurately forecast this level of demand in Canada.
The research showed that the average per capita expenditure in the product class is
approximately $14.33 for the U.S. and $12.20 for Canada (about 15% less than that of U.S.
customers).
According to their research, Canada has many comparative advantages over the U.S. in terms of
natural commodities. This includes an excess supply of high quality wheat, lower costs of sugar,
lower costs of energy and competitive overhead costs.
Sociocultural Environment
Throughout their research, Finney and Job found that many consumers were interested in high
quality products that could be prepared quickly, and that on-the-go consumers were looking for
portability in bakery products that could match their life and work styles. They also found that
many consumers were moving toward natural and healthy food options. Research showed that by
2001, demand for organic food in Canada had experienced an annual growth rate of 20% and
that the majority of Canadians are willing to spend more for chemical-free food, and 25% would
spend up to 50% more.
Microenvironment
Sales/pricing
A leading U.S. competing branded product wholesales for approximately $25 per case of 216
biscuits (exclusive of shipping). For this reason, By-the-Sea Biscuit Company decided to price
the traditional biscuit variety at $13.50 per case in order to be competitive in its pricing and leave
room for retailers to cover the additional shipping costs from Canada to the U.S.
Finney and Jobe also discussed the need to have different pricing levels for wholesalers and
smaller retailers; however, they expected the overall average to be near the $13.50 price level. A
bag containing a dozen biscuits typically retailed for $2.99 to the final consumer.
Cost
See Appendix A for fixed costs.

4. By-the-Sea Biscuit Company Group 6 Case Analysis 4
Market
Due to the proximity, competitive factors, and growing in-store bakery segments, the target
market for By-the-Sea Biscuit would be the Atlantic Canada region and the Northeastern United
States (New England states and New York State).
In Canada, the targeted B2B outlets are the 3 major wholesale grocery chains - Atlantic
Wholesalers, Sobey’s, and Co-op Atlantic. Of these, Co-op Atlantic is the most attractive
because of their focus on and mandated commitment to local products. They are more likely to
support local suppliers (By-the-Sea Biscuits) and they currently don’t have a frozen biscuit
supplier.
In The U.S., Price Chopper (112 stores) seems to be the most attractive option. The reasons for
this are proximity, and the fact that By-the-Sea Biscuits will be able to compete on price and
possibly differentiate with a healthy biscuit alternative.
By-the-Sea Biscuit Company aims to capture 50% of the frozen biscuit market within these two
grocery retailers. They feel this is possible due to lack of competition and their ability to price
competitively.
We know that a bag containing a dozen biscuits typically retailed for $2.99 to the final consumer.
That means that the price of a case of 216 biscuits is $53.82 for the final consumer:
Table A: Pricing for Traditional
Price for final customer (1 bag) $2.99
Number of biscuits in a case 216
Number of biscuits in a bag 12
Number of bags in a case 18
Price for final customer (1 case) $53.82
According to U.S. Census and Statistic Canada website and Finney’s estimation about average
per capita expenditures in the product class in the US and in Canada, we can estimate the market
size for Atlantic Canada, New England states and New York:

5. By-the-Sea Biscuit Company Group 6 Case Analysis 5
Table B: Market Share
Market Population
Expenditure per
capita
Market size, $ Market size, cases
US 299,344,150 $14.33 $4,289,601,670 79,702,744
New England States 13,922,517 $14.33 $199,509,669 3,706,980
Worcester, MA 172,648 $14.33 $2,474,046 45,969
Burlington, VT 608,827 $14.33 $8,724,491 162,105
New York State 18,976,457 $14.33 $271,932,629 5,052,632
Albany, NY 95,658 $14.33 $1,370,779 25,470
Utica Rome, NY 299,896 $14.33 $4,297,510 79,850
Poughkeepsie, NY 29,871 $14.33 $428,051 7,953
Syracuse, NY 147,306 $14.33 $2,110,895 39,221
Canada 32,623,490 $12.20 $398,006,578 7,395,143
Atlantic Canada 2,285,729 $12.20 $27,885,894 518,133
By-the-Sea Biscuit Company plans to distribute its production through Co-op Atlantic (in
Canada) and Price Chopper (in the US). Co-op Atlantic is a small retailer that has 20 percent of
the market, and the market share held by Price Chopper varies 6.7 percent in Poughkeepsie, NY
to 36 percent in Albany, NY. The market size that By-the-Sea Biscuit Company can reach
through these retailers is calculated in the Table C.
Table C: Market Size by Retailer
Retailer
Market
share
Market size,
total
Market size of
the retailer, $
Market size of the
retailer, cases
Co-op Atlantic 20% $27,885,894 $5,577,178.76 103,627
Price Chopper $3,026,308.92 56,230
New England States
Worcester, MA 19.50% $2,474,045.84 $482,438.94 8,964
Burlington, VT 11.60% $8,724,490.91 $1,012,040.95 18,804
New York State
Albany, NY 36% $1,370,779.14 $493,480.49 9,169
Utica Rome, NY 17.60% $4,297,509.68 $756,361.70 14,054
Poughkeepsie, NY 6.70% $428,051.43 $28,679.45 533
Syracuse, NY 12% $2,110,894.98 $253,307.40 4,707

6. By-the-Sea Biscuit Company Group 6 Case Analysis 6
SWOT Analysis
Strengths Weaknesses
Frozen Dough:
• Extended shelf-life
• Natural additives to frozen dough
make it comparable to homemade
dough.
• Rapid freeze method to minimize
fermentation during dough
preparation.
• Convenient breakfast alternative
(available in such locations as gas
stations and fast-food franchises)
By-the-Sea Biscuit Product:
• Both Finney and Jobe have
backgrounds that are well-suited to
this industry; they do not need to hire
any additional managers.
• Convenience
• Freshness
• The company can differentiate itself
from competitors by offering an
Omega-3 flax-enriched biscuit product
that would be appealing to the health-
conscious consumer.
Pricing:
• The biscuits will be priced very
competitively to the product offering
in the U.S.
• $13.50 per case (traditional biscuit)
• $2.99 retail price for 12-biscuit bag
Distribution:
• Refrigerated ship containers are cost-
effective alternative distribution for
US Eastern seaboard destinations.
Promotional Mix:
• Direct solicitation to potential buyers
• PLMA show has significant
Pricing:
• Pricing for the “healthy omega 3” flax-
enriched biscuit has yet to be
determined and will likely be higher
than the traditional biscuit price.
• Different pricing levels for
wholesalers and smaller retailers -
exact differences have yet to be
determined.
Distribution:
• No confirmation on direct selling to
Co-op Atlantic and price chopper
• Higher shipping costs from Canada.
Could deter U.S. companies from
purchasing By-the-Sea Biscuit’s
products because the shipping cost is
on the buyer.
Promotional Mix:
• Domestic and international food trade
shows are costly. Can only afford two.
• No immediate plans for any consumer-
based advertising.
Production:
• After equipment purchase, it will take
4-5 months to assemble the equipment
before production can begin.
• The freezing process could slow
production.
• Supplying a national chain is beyond
their capabilities, at least at the onset.

7. By-the-Sea Biscuit Company Group 6 Case Analysis 7
foodservice and retail appeal for
buyers in the growing frozen food
industry.
• Re-design website and promotion to
create leads.
• Include “shipping estimator” so
potential buyers can accurately
evaluate the cost.
Operations Plan/Facility:
• Labor costs would be less in Cape
Breton.
• They do not foresee any special
requirements or major modifications to
the existing facility to accommodate
their needs; all required freezing
equipment is in place.
• Operation doesn’t require the entire
space (room for future expansion).
• Education requirements for staff
would be minimal and training would
be provided.
• Rental costs at the CBIRC facility is
significantly less than other locations.
Opportunities Threats
Market Opportunity (retail/wholesale biscuit
& bakery):
• Canada has a comparative advantage
in this industry over the U.S. due to
the excess supply of high quality
wheat, lower sugar prices, lower
energy costs, and competitive
overhead costs.
• Between 1998 and 2006, the retail
value for bakery products produced in
Canada had increased by 43.8 percent.
• No other competitors in the Canadian
frozen biscuit market.
Market Trends:
• There is no evidence of another
manufacturer of frozen biscuit dough
that has differentiated its product by
Market:
• US frozen dough market is more
developed.
• Lack of data and relevant sources and
some outdated data.
Social Trends:
• The baked goods industry is
susceptible to different dietary trends.
For example: analysts attributed “the
slight decline between 2001 and
2003,” to the Atkins craze and carb-
reduction diets.
Competition:
• Four businesses located in New
Brunswick and Nova Scotia
• Canadian firms, such as Canada Bread

8. By-the-Sea Biscuit Company Group 6 Case Analysis 8
offering a “healthy” alternative.
• Based off of the trend toward healthy
and organic, there is an opportunity for
differentiation by adding such a
product.
• Based off of the on-the-go individual
packaging trend, there is also
opportunity for differentiation by
offering such a product.
Target Markets:
• The total value of bakery exports to
the U.S. in 2005 was $545 million (not
including exports of frozen or par-
baked products).
• According to research by Agri-Food
Canada, there were many growth
opportunities in North America’s
biscuit and bakery market. In fact, the
organization went so far as to state that
Canada was “the location of choice for
manufacturers of biscuits and baked
products for the North American
market.”
• Similarly, a report by the Alberta
Department of Agriculture, Food, and
Rural Development stated, “the
opportunities for greatest expansion in
the bread and dough market will be in
wheat-based, ready-to-eat baked or
par-baked frozen dough mixes.”
• Co-op does not have a supply of
frozen bread products.
Global Factors:
• The Canadian dollar was gaining
strength and as of January 2007, the
U.S. dollar was valued at $1.16 CAD.
Company, were among the first in
North America to develop quality
frozen dough, and have established a
strong presence in the U.S. market for
their frozen products
Global Factors:
• The exchange rates between USD and
CAD can fluctuate and be
unpredictable and could have an
impact on By-the-Sea Biscuits ability
to sell to U.S. markets.

9. By-the-Sea Biscuit Company Group 6 Case Analysis 9
Problem Statement
Find the most efficient way to reach the breakeven point and develop the most profitable
marketing and production plan to differentiate By-the-Sea Biscuit Company’s product offering
and make this new business venture feasible.
Critical Factors
1. Distribution
2. Demand – establish demand for organic food offering in each target region.
3. Competition – there are different degrees of competition in each target region.
4. Market Share
5. Price – two prices based on the two different product offering: traditional and Omega 3-
enriched.
6. Organic/healthy food trend
7. Target Audience
Solution 1
Atlantic Canada Only
By spending an additional $10,000 on research development for the recipe of the flax dough
variety over the first 6 months of business, the company will be able to produce Healthy Omega
3 dough. Demand on organic food in Canada is growing, and 25 percent of Canadians would
spend up to 50 percent more on the organic food. Based on this, we can assume that starting in
the seventh month the company will produce Healthy Omega 3 dough and sell it to 25 percent of
customers instead of the traditional dough.
Place: By-the-Sea Biscuit Company starts with selling frozen dough only in Atlantic Canada, and
will not try to enter the US market. The company will distribute its unbranded product through
Co-op Atlantic, which has 110 shops and is focused on local producers. Due to the high
production ability of the Clearwater facility (By-the-Sea Biscuit Company can produce 15,050
cases per month, which equates to 120,400 cases during the first year over 8 months of
operations, working 5-day weeks, at 50-60% capacity) and the relatively low market share that
can be reached through Co-op Atlantic (20% - can distribute only 103,627 cases per year; see
Table C above), we suggest that By-the-Sea Biscuit Company should also try to gain 50% of the
entire Atlantic Canada market by distributing to two other Canadian retailers: Atlantic
Wholesalers and Sobeys. Within each of these retailers, they will focus distribution on both
grocery stores with an in-store bakery and those without.
Product
• Production overview: By-the-Sea’s marketing opportunities exceed company’s
production capabilities, which equals 120,400 cases per month. Because income per case

10. By-the-Sea Biscuit Company Group 6 Case Analysis 10
for Healthy Omega 3 would be higher for the traditional option, it is reasonable to fulfill
demand on the organic dough and produce less of the traditional option.
o Months 1-4: no production (facility preparations)
§ Additionally, during the first 6 months By-the-Sea Biscuit Company will
need to develop the recipe for the Omega 3 flax-enriched biscuit.
o Months 5-6: produce 100% traditional biscuits
o Months 7-12: produce 75% traditional biscuits and 25% Omega 3 flax-enriched
biscuits.
Table D: Market Size for Atlantic Canada
Month
Market
share, %
Market
size, cases
Traditional Healthy Omega 3
%
Number of
cases
Market size %
Number of
cases
Market size
1 0 0 0% 0 $0 0% 0 $0
2 0 0 0% 0 $0 0% 0 $0
3 0 0 0% 0 $0 0% 0 $0
4 0 0 0% 0 $0 0% 0 $0
5 0.1 4,318 100% 4,318 $232,382 0% 0 $0
6 0.2 8,636 100% 8,636 $464,765 0% 0 $0
7 0.3 12,953 75% 9,715 $522,861 25% 3,238 $261,430
8 0.4 17,271 75% 12,953 $697,147 25% 4,318 $348,574
9 0.5 21,589 75% 16,192 $871,434 25% 5,397 $435,717
10 0.5 21,589 75% 16,192 $871,434 25% 5,397 $435,717
11 0.5 21,589 75% 16,192 $871,434 25% 5,397 $435,717
12 0.5 21,589 75% 16,192 $871,434 25% 5,397 $435,717
Total 129,533 100,388 $5,402,892 29,145 $2,352,872
Dough production will begin at month 5, when By-the-Sea Biscuit will meet 10% of the market.
Thus, during the first three months of production (months 5-7) By-the-Sea Biscuit will be
producing more than they can distribute, but due to high shelf life, they will be able to store the
product and distribute once demand meets production capacity. To ensure quality of the product,
they will distribute the products that have been in storage the longest first.

11. By-the-Sea Biscuit Company Group 6 Case Analysis 11
Table E: Production Plan (solution 1)
Month
Traditional Healthy Omega 3
Number of cases Revenue Income Number of cases Revenue Income
1 0 $0 $0 0 $0 $0
2 0 $0 $0 0 $0 $0
3 0 $0 $0 0 $0 $0
4 0 $0 $0 0 $0 $0
5 15,050 $203,175 $59,699 0 $0 $0
6 15,050 $203,175 $59,699 0 $0 $0
7 11,812 $159,462 $46,854 3,238 $65,570 $29,662
8 10,732 $144,885 $42,571 4,318 $87,435 $39,554
9 9,653 $130,313 $38,289 5,397 $109,294 $49,442
10 9,653 $130,313 $38,289 5,397 $109,294 $49,442
11 9,653 $130,313 $38,289 5,397 $109,294 $49,442
12 9,653 $130,313 $38,289 5,397 $109,294 $49,442
Total: 91,255 $1,231,948 $361,981 29,145 $590,179 $266,985
Total Revenue: $1,822,126
Total Income: $628,965
• Positioning:
o Position the traditional biscuits as pre-meal and holiday biscuits in Atlantic
Wholesalers and Sobey’s, the two retailers that do not specialize in healthy local
products.
o Once the Omega-3 flax-enriched biscuit recipe is developed (month 6), position
within Co-op Atlantic retail stores as a quick healthy option for single-family
homes and mom’s on-the-go.
Price:
• The traditional biscuit variety will be priced to wholesalers at $13.50 per case (as Jobe
proposed). The traditional biscuits will be priced to consumers at $2.99 per dozen
biscuits.
• The Omega 3 flax-enriched biscuit variety will be priced to wholesalers at $20.25 per
case (50% price increase compared to traditional biscuit variety). The healthy Omega 3
biscuits will be priced to consumers at $4.49 per dozen biscuits (50% price increase,
which is supported by the claim in the case study that, “25 percent [of Canadians] would
spend up to 50 percent more [on chemical-free foods].”)

12. By-the-Sea Biscuit Company Group 6 Case Analysis 12
Table F: Pricing for Omega-3 flax enriched
Price for final customer (1 bag) $4.49
Number of biscuits in a case 216
Number of biscuits in a bag 12
Number of bags in a case 18
Price for final customer (1 case) $80.73
Customers would pay up to 50 percent more for the organic food, therefore, the company may
rise the price for a case on 50 percent compare to the traditional dough. Based on the assumption
that production cost would increase only on 20%, the production cost would be $9.34.
Table G: Production Cost and Breakeven Points
Production costs Traditional Healthy Omega 3
Total variable cost (per case) $7.78 $9.34
Fixed costs $211,100
Unit cost $9.53 $11.09
Price (per case) $13.50 $20.25
Break-even point 36,906 19,342
Income (per case) $3.97 $9.16
Due to the combined production of traditional and healthy biscuits, the overall breakeven point
will be reached in the third month of production (7th
month overall).
Promotion:
• Advertising/Food Trade Shows: participate in two domestic (sponsored by the Canadian
Government) trade shows in the first year of operation to gain leads.
• Additionally, the company can employ direct solicitation to the wholesaler/retailer, where
product samples and pricing will be provided to potential buyers, thus assuring them of
the quality of the product.
• There is no need to use a branded product approach for By-the-Sea Biscuit Company, but
if they eventually decide to adopt such an approach then the promotional mix will have to
be altered slightly.
Pros:
1. The cheaper local shipping costs will result in a higher margin for the grocery retail
outlet.
2. As of now, there are no competitors in the market, so the price per case could potentially
be raised if demand is significant enough.
3. Less pressure to differentiate the product compared to competitors due to the lack of
competition.
4. There is potential for a “Buy Local” advertising campaign.

13. By-the-Sea Biscuit Company Group 6 Case Analysis 13
Cons:
1. No proven demand.
2. Potential lost opportunity by not immediately entering the U.S. market.
Solution 2
Atlantic Canada and New York and New England regions
Place: By-the-Sea Biscuit Company will start selling frozen dough only in Atlantic Canada as
well as the two U.S. regions of New York and New England. In Atlantic Canada, By-the-Sea
Biscuit Company will distribute through Co-op Atlantic, Atlantic Wholesalers and Sobey’s. In
the chosen U.S. markets, By-the-Sea Biscuit Company will distribute through Price Chopper.
Within each of these retailers, they will focus distribution on both grocery stores with an in-store
bakery and those without. In order to ensure that shipping costs for U.S. retailers are not a
deterrent for purchasing By-the-Sea Biscuit Company’s products, By-the-Sea Biscuit Company
will utilize refrigerated shipping containers to export their products as a more cost-effective
alternative than road or rail.
Product
• Production:
o Months 1-4: no production (facility preparations)
§ additionally, during the first 6 months develop the recipe for the Omega 3
flax-enriched biscuit.
o Months 5-6: produce 100% traditional biscuits
o Months 7-12: To fulfill demand on the organic dough in the U.S. and Canada, the
overall ratio of production will be 70% for traditional and 30% for healthy. By-
the-Sea Biscuit Company will distribute according the below demand:
§ For Canadian market: 75% traditional biscuits and 25% omega-enriched
flax seed biscuits.
§ For U.S. markets: 50% traditional biscuits and 50% Omega 3 healthy
biscuits.
§ The demand on the frozen dough in Canada is mentioned in the Table D.
§ The demand on the frozen dough in New England and New York in
shown in the Table H below:

14. By-the-Sea Biscuit Company Group 6 Case Analysis 14
Table H: Market Size for New England and New York
Month
Market
share, %
Market
size, cases
Traditional Healthy Omega 3
Percentage of
production
Number
of cases
Market size
Ratio of
production
Number
of cases
Market
size
1 0 0 0% 0 $0 0% 0 $0
2 0 0 0% 0 $0 0% 0 $0
3 0 0 0% 0 $0 0% 0 $0
4 0 0 0% 0 $0 0% 0 $0
5 0.1 469 100% 469 $25,219 0% 0 $0
6 0.2 937 100% 937 $50,438 0% 0 $0
7 0.3 1,406 50% 703 $37,829 50% 703 $56,743
8 0.4 1,874 50% 937 $50,438 50% 937 $75,658
9 0.5 2,343 50% 1,171 $63,048 50% 1,171 $94,572
10 0.5 2,343 50% 1,171 $63,048 50% 1,171 $94,572
11 0.5 2,343 50% 1,171 $63,048 50% 1,171 $94,572
12 0.5 2,343 50% 1,171 $63,048 50% 1,171 $94,572
Total 14,058 7,732 $416,117 6,326 $510,690
Table I: Production Plan (solution 2)
Month
Traditional Healthy Omega 3
Number of cases Revenue Income Number of cases Revenue Income
1 0 $0 $0 0 $0 $0
2 0 $0 $0 0 $0 $0
3 0 $0 $0 0 $0 $0
4 0 $0 $0 0 $0 $0
5 15,050 $203,175 $59,699 0 $0 $0
6 15,050 $203,175 $59,699 0 $0 $0
7 11,109 $149,972 $44,066 3,941 $79,805 $36,102
8 9,795 $132,233 $38,854 5,255 $106,414 $48,139
9 8,481 $114,494 $33,641 6,569 $133,022 $60,176
10 8,481 $114,494 $33,641 6,569 $133,022 $60,176
11 8,481 $114,494 $33,641 6,569 $133,022 $60,176
12 8,481 $114,494 $33,641 6,569 $133,022 $60,176
Total: 84,928 $1,146,528 $336,882 35,472 $718,308 $324,948

15. By-the-Sea Biscuit Company Group 6 Case Analysis 15
Total Revenue: $1,864,836
Total Income: $661,830
Positioning:
• Canadian market:
o Position the traditional biscuits as pre-dinner and holiday biscuits in Atlantic
Wholesalers and Sobey’s, the two retailers that do not specialize in healthy
organic products.
o Position the Omega 3 flax-enriched biscuits in Co-op Atlantic as a healthy, local
product; should appeal to those who buy local and are looking for organic-type
options.
• New York and New England markets:
o Position the traditional biscuits as an on-the-go alternative to breakfast because
there is a noticeable demand for such products in the U.S.
o Position the Omega 3 flax-enriched biscuits as a healthy pre-meal or holiday
option for individuals and families looking to take a slightly healthy alternative on
their normal biscuit consumption. Because the U.S. biscuit market is already
highly saturated, differentiating these biscuits as a healthy alternative to the
standard pre-meal biscuit will give the product a unique selling proposition.
Promotion
• Advertising/food shows: direct solicitation to the wholesaler/retailer, along with product
samples and pricing information.
• Website design that can creates leads for the company; include shipping cost calculator
so that potential buyers can accurately estimate their potential margins.
• Attend two food trade shows:
o The Private Label Manufacturers’ Association (PLMA) in Chicago has a
significant foodservice and retail appeal for buyers in the growing frozen food
manufacturing. Canadian exporters can use the PLMA to demonstrate their
strengths in frozen food manufacturing.
o Another event, potentially the Canadian Pavilion.
• There is no need to use a branded product approach for By-the-Sea Biscuit Company, but
if they eventually decide to adopt such an approach then the promotional mix will have to
be altered slightly.
Pros:
1. By-the-Sea Biscuit Company’s products are priced very competitively compared to the
other product offerings in the U.S.
2. Many regional U.S. stores are geographically close to Canada, and in-store bakery
segment continues to grow.
3. Canadian dollar is cheaper than US dollar, so expenses of the By-the-Sea will be lower
than competitors’ expenses.
4. Differentiate from the competition in the U.S. by providing a healthy biscuit alternative
to traditional biscuits.

16. By-the-Sea Biscuit Company Group 6 Case Analysis 16
5. Although consumer behavior information was not readily available in the case study, it
stated that informed market observations indicated a very strong movement to position
biscuits as convenient breakfast alternatives, thus positioning the traditional biscuit
product in this manner will help different By-the-Sea Biscuit Company’s product offering
from already established brands’ products.
6. Despite the higher shipping cost burden on the retail buyer, By-the-Sea Biscuit Company
can use refrigerated shipping containers as a more cost-effective alternative for
exporting to the U.S.
Cons:
1. Distribution from Canada to the U.S. would be more expensive compared to the shipping
within Canada, may deter U.S. retailers from purchasing By-the-Sea Biscuit Company’s
products because they could potentially find alternatives that are located in more
convenient places.
2. Competition from existing, established firms such as Canada Bread Company in the U.S.
Thus, By-the-Sea Biscuit Company must find a way to differentiate their product offering
from those already in the market due to the higher level of market saturation.
3. We can assume that the exchange rate between the U.S. and Canada will play a role in
the calculations included in this suggestion, however, they are not addressed here because
it only impacts the price that U.S. buyers will pay.
Recommendation
Based on the above calculations, we recommend that By-the-Sea Biscuit Company select
solution 2: to enter both the U.S.’s New England and New York markets and the Atlantic Canada
market simultaneously. By entering both markets, the company will sell more of the healthy
dough (which is priced higher and thus results in higher profits) and will be able to push more
product through in future years. In the second year of operations once production is at full force,
we will be already established in the U.S. and can start to connect with more retailers and push
more product into the U.S.
Revenue difference Solution 2 and Solution 1: $1,864,836 - $1,822,126 = $42,710
Income difference Solution 2 and Solution 1: $661,830 - $628,965 = $32,864
Due to the fact that the U.S. biscuit market is already highly saturated, By-the-Sea Biscuit
Company will differentiate its product proposition by offering the product at a significantly
lower price point than its competitors and by positioning the traditional biscuits as single-serving
on-the-go product and the Omega-3 biscuits as a healthy alternative to the standard biscuit
offering. In Canada, By-the-Sea Biscuit Company doesn’t have to worry about competition so it
can offer a wider range of products. Specifically, a healthy option that will be positioned within
the Co-op Atlantic stores and a traditional option within the other two retailers.
In the first year of business, it is important to establish a reputation in the industry, thus, By-the-
Sea Biscuit Company will attend two trade shows and should plan to contact other retailers

17. By-the-Sea Biscuit Company Group 6 Case Analysis 17
through direct solicitation in order to create business contacts for the second year of operations,
at which point By-the-Sea Biscuit Company will have higher production rates. In the U.S.
specifically, the development of a website is also important so that potential buyers can use a
“shipping estimator” to calculate their potential margins when selling to consumers.

18. By-the-Sea Biscuit Company Group 6 Case Analysis 18
Appendix A
Based on these calculations we decided that “option 3” is the most economically feasible. For all
calculations in this analysis we are using “option 3” as the main fixed cost assumption.
Fixed costs: Amount Note
Equipment (new) $158,000 Option 1
Depreciation (10%) $15,800 /year
Equipment (used) $100,000 Option 2
Depreciation (10%) $10,000 /year
Bakery line 1 $74,000 Option 3
Depreciation (10%) $7,400 /year
Bakery line 2 $80,000 Option 4
Depreciation (10%) $8,000 /year
Building (rent) annually $90,000 (10/sq.ft * 9000sq.ft)
Office Equipment $2,400 /year, ($200*12)
Salaries (managers) $40,000
Mandatory Employer Related Costs $4,800 12%
Salaries (managers) with insurance $44,800
Raw materials $30,000
Research on healthy options $10,000
Marketing and Travel Expense $19,000
Monthly interest payments $7,500 /year, $625*12
Total fixed costs (option 1) 219,500 /year
Total fixed costs (option 2) 213,700 /year
Total fixed costs (option 3) 211,100 /year
Total fixed costs (option 4) 211,700 /year

19. By-the-Sea Biscuit Company Group 6 Case Analysis 19
Appendix B
Income Statement
Company: By-the-Sea Biscuit Company Income Statement
Revenue 2007 2006
Sales revenue (Quantity) $1,864,836
(Less sales returns and allowances) -
Service revenue -
Interest revenue -
Other revenue -
Total Revenues $1,864,836 -
Expenses
Marketing and Travel $19,000
Bad debt -
Commissions -
Cost of goods sold $991,906
Depreciation $7,400
Employee benefits -
Insurance $4,800
Interest expense $7,500
Maintenance and repairs -
Office supplies $2,400
Payroll taxes -
Rent and Electricity $90,000
Research and development $40,000
Salaries and wages $40,000
Software -
Utilities -
Web hosting and domains -
Other -
Total Expenses $1,203,006 -
Net Income Before Taxes $661,830 -

20. By-the-Sea Biscuit Company Group 6 Case Analysis 20
Income tax expense
Income from Continuing Operations $661,830 -
Below-the-Line Items
Income from discontinued operations -
Effect of accounting changes -
Extraordinary items -
Net Income $661,830 -