The Kernel Keto Company’s Strategic (SWOT) Analysis

Topic: Company Analysis
Words: 1795 Pages: 5

Kernel Keto Business Plan

Kernel Keto is a medium-sized business that works with a growing number of customers throughout the country. Its initial goal is to reach the mark of $1 million in sales by the end of the second year since the company’s business was launched. The company developed an effective strategical position using the strategic approaches of customer perceptions factors and the business model of selling physical products. This paper demonstrates a business plan for Kernel Keto, which will include analyzing the industry trends, developing the strategic positioning, choosing distribution channels, and presenting a SWOT matrix balancing risks and opportunities.

Product Description

Kernel Keto is a company that produces keto granola bars. These bars consist of a mixture of almonds, cashews, pistachio, Thai coconut, and maple syrup. The snacks are produced with no added sugar, food colorants, or artificial flavors. Kernel Keto provides consumers with a wide variety of bars to choose from. Along with the nut’s bars, there are bars with dried strawberries, cherries, raspberries, and blackcurrants. These bars are low-carb snacks, so they are not covered with chocolate glaze, which usually contains added sugar. However, in the future, it is possible to launch product lines with glaze, the ingredients of which are pure cocoa paste with cocoa butter, blueberry paste, cranberry paste, raspberry paste, and orange, lemon, or lime peel paste. Fruit and berry spreads will use a unique icing recipe and present a crispy crust, while cocoa paste is the more traditional choice for soft and delicate icing (IBIS World, 2020). This choice of glazing was made because of the bright colors, usefulness, and recognition of these products.

The Mission Statement

The mission statement of Kernel Keto is “Fill the body with truly healthy ingredients.” The purpose of Kernel Keto is to produce low-carb snacks that consist of natural ingredients. Many existing granola bars that are advertised as healthy are full of carbs and added sugar. Kernel Keto makes a difference because it offers nourishing granola bars, high in proteins, natural, and delicious, all at the same time. Kernel Keto’s bars are created for vegans, vegetarians, meat-eaters, athletes, children, and those who snack on the go.

The price of the product is another of its strengths, as the ingredients of the product are purchased at competitive prices from local suppliers. Equally important, Kernel Keto provides additional services to its customers. For example, selling at wholesale prices, gift-wrapping or packaging with an alternative design for cafes and restaurants, and free shipping for large orders. Kernel Keto also offers a free tasting of new products on the company’s opening day, with samples of bars with new tastes sent along with greeting cards. Additional services will demonstrate attention and respect for customers. At the same time, the overall relationship with the customer can be expressed through the common desire to create healthy and tasty products and improve the mood of customers.

The management style and attitude towards employees is an important elements of how a company positions itself in the market and is perceived by customers and partners. Therefore, Kernel Keto intends to provide a corporate culture that supports high moral values and takes care of its employees by creating stable and favorable working conditions for them. The work environment will have a transparent nature so that the HR department can help employees solve problems when they arise and monitor the quality of process management.

Kernel Keto will adhere to the rules of fair competition concerning the rest of the industry. This is an important element of success, given that the health food market is new and players who start to follow the existing rules are constantly appearing in it. Equally important, Kernel Keto will use original manufacturing techniques developed by technologists in the US and manufactured in China according to the proposed schemes. Kernel Keto aims to increase its sales revenue to $1 million by its second year of a business launch. Overall, Kernel Keto hopes to become one of the market leaders and establish its strategic position with a permanent base of loyal customers.

During the last five years, consumers have shown an increased demand for organic products. Their attention to health is high, and they adhere to diets, the menu of which consists entirely of organic products. Natural food manufacturers that allow low-sugar sweets are also benefiting from this trend. As a rule, production costs for organic products are higher, which creates certain obstacles for producers. At the same time, the organic market shows steady growth despite the growing prices for the constituting products. Another serious problem is that organic products are only available to higher-income consumers, who represent the main group of buyers. The industry saw a 22% growth in 2017-2022, and experts predict a further 17% growth over the next five years, including 15% growth for granola and nutrition bars (1). The largest players in the US organic snack food industry are General Mills Inc. and Campbell Soup Company.

Even though these market giants have considerable experience in the production of fast food products, less experienced manufacturers have an equal chance with them due to the nature of the industry. In today’s organic snack food industry, companies produce packaged foods that are available for retailers. The organic ingredients that are used for production are certified by the USDA. It is noteworthy that today there are such categories of organic products – industrial products and services, salty snacks, fruit snacks, granola and nutrition bars, and others. Therefore, Kernel Keto, as a manufacturer of granola and nutrition bars, competes with both manufacturers of similar products and other types of products.

Strategic Position

Wise company managers ensure that their strategic position lies at the intersection of the company’s strengths and interests. Industry trends and developments, market changes and opportunities brought through new technologies are also of great importance. Scholars mention that small companies that have a good understanding of the process of choosing or establishing the right strategic position can quickly grow from local sellers that target local buyers to national manufacturers with average sales volumes. Therefore, Kernel Keto will pay special attention to strategic positioning to achieve its goal of $1 million in profit in two years. The researchers emphasize that manufacturers should properly prioritize and avoid investing in activities with lower priority. Therefore, the scholars mention that defining a strategic position is about creating a meaningful position in the market. This is a very sensible observation, and Kernel Keto will make every effort to create a unique position in the market.

Traditionally, strategic approaches to distinguish the company include customer perception factors, market segment, market share, operational and technological advantages, proprietary products, technology, abilities and relationships, sales channels, business model, first-mover advantage, lean start-up, and branding. Kernel Keto will rely on customer perception factors, including societal impact, features, price, quality, customer service, and convenience. It will also utilize the business model approach, choosing the sell physical products business model. For instance, manufacturers and retailers can sell the products directly to consumers through wholesale sales, brokering, leasing, shared ownership, subscription service, per-use fee, advertising and sponsorship, licensing and franchising, auction, donations, and grants (IBIS World, 2020). Therefore, Kernel Keto will rely on direct and wholesale types of sales.

Distribution Channels

The company will sell the products in grocery stores, cafes and restaurants, and also in sports venues. Public places are good for advertising and attracting new clients. At the same time, Kernel Keto will sell the products online with direct delivery. Given the new realities associated with the pandemic, many shoppers are buying groceries in advance, and orders for home delivery are expected to rise. Unfortunately, soon, we can expect reduced demand in places of mass gatherings of people due to quarantine restrictions.

Marketing Vehicles Table
Marketing Vehicle Frequency Cost/Month
Social Media: Facebook, Twitter, LinkedIn, Reddit, and Instagram 20-30 times a day $450 per month
Local TV Station 12 times a day $4,000 per month
National TV 5 times a day $1000 per month
Local Radio 25 times a day $2,000 per month
National Radio 8 times a day $2,000 per month
Flyers, banners, and ads 2500 in the city $4000 in total per month
Direct mail 4000 per day $4000 per month

SWOT Matrix – Balancing Risks and Opportunities

SWOT matrix is a handy tool to determine the expected risks and opportunities, which is very important for determining development paths and strategies, including the strategic market position. Risk types include market, competitive, technology, product, execution, capitalization, and global risks. Companies often use the SWOT matrix to balance the risks and opportunities. For Kernel Keto, its main threats include competition with Munk Pack, Magic Spoon, and Perfect Keto.

Strengths
1. Kernel Keto produces low-carb snacks that contain no added sugar, food colorants, and artificial flavors.
2. Keto and low-carb snacks are in a growing industry, and it lacks an entrenched competitor because other similar companies add sugar and artificial flavors to their granola bars.
3. Kernel Keto is in a niche market of health and wellness, a sub-niche of nutrition, and it has great potential among vegetarians, vegans, meat-eaters, and other people who prefer healthy lifestyles.
4. We bring collaboration, promotion, strong communication, respect, responsibility, and an aspiration to improve.
Weaknesses
1. High production costs because all products are natural and healthy.
2. Some competitors, like Keto and Company, Perfect Keto, Bulletproof 360, Inc., and others, offer keto bars and snacks to their consumers (2).
3. Yes, the management team is inexperienced in this field.
4. It may be challenging to produce keto granola bars because of the need to preserve quality without adding any sugar, preservatives, or stabilizers.
Opportunities
1. Since obesity continues to be a great problem, producing low-carb keto granola bars will bring profits.
2. The demand for keto bars is growing, and it is higher than the supply.
3. Yes, larger corporations stopped serving some niche markets that Kernel Keto could enter.
4. Yes, a new market is emerging because of changing tastes and a growing trend in the keto diet.
Threats
1. Munk Pack and Perfect Keto.
2. Yes, such companies as Munk Pack and Magic Spoon will be hard and expensive to displace.
3. Yes, the downward-pricing pressures are making profit margins slim.
4. There are a few barriers to entry for new competitors, including low product differentiation.

On the other hand, given the growth trends in the industry of organic products, more favorable conditions for sales growth can be expected. Low barriers of entry for new competitors are another considerable threat. Some opportunities balance the threats: low-carb granola and bars have high demand among people who need a healthy diet. Also, Kernel Keto is in a niche market of health and wellness, a sub-niche of nutrition, and it has great potential among vegetarians, vegans, meat-eaters, and other people who prefer healthy lifestyles.

References

IBIS World. (2020). Organic snack production industry in the US – market research report. (2022). IBIS World. Web.

Wood, L. (2019). Global keto diet market report 2019-2023: Increasing investment by big players in the market – Leading players are Ample Foods, Bulletproof 360, Lovegood fats, Prefect Keto, & Privet Ventures. Business Wire. Web.

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