MM5011 Knowledge Management and Innovation

FINAL EXAM Prime Analysis and Business Model of Muscle Egg Shake

29111311 Haidir Afesina MBA Executive 46

MASTER OF BUSINESS ADMINISTRATION SCHOOL OF BUSINESS AND MANAGEMENT INSTITUT TEKNOLOGI BANDUNG 2012

Photo: Fezi`s property with permission from Handy and Budi

ENTREPRENEUR PROFILE
Name : Budiardi

Date of Birth : October 19th, 1977 Address Occupation Education Hobby Employees : Jl Situ no 3 Bandung : Entrepreneur : Architecture at Parahyangan University 1997 : Networking :3

Dare to fail as your first step, then improve and be the best
It was his first sentences on our first conversation. A philosophy that made him believe success is start with our first step. Started many businesses as re-seller, distributor (baby product Sachi and Crown) and has muscle egg shake as his own product bring him tears of joy. Ko Budi, a call to respect older brother, likes to meet successful people and attend business and motivation seminars. He said, Their attitude enlightens and motivates us. Their stories are lessons learned that bring positivity to trust yourself and never give up. Ko` Budi also believes that inspiration is

everywhere, and most likely from conversation. Thus he likes to make networking with everyone. September 2011, he accompanied his friends to attend Ade Rai Seminar. From the seminar, he got the inspiration to create Ade Rai`s natural favorite drink i.e. white egg. He believes that it will be a successfully product as many people at the gym needs natural protein sources. However, there is a big player as competitor Jakarta i.e. Xpose. It made him more motivated as there is none in Bandung. He believed that his homemade style and price would be advantage. On the other hand he realized that the challenge is to create it with a good and tasty flavor. It seems impossible to keep it natural as white egg has a nasty and smelly flavor. Ko` Budi still has faith that there is still huge market (especially in Bandung) and only the best product that will be succeed. Then he just decided to make it and wait for the market response. Therefore many times he stated first step is important and improve it on the way to reach his goal. Thus with his own money he created CV. Prima Food to produce the products with three employees who help him. In October 2011, his Muscle Egg Shake (MES) is available on the market.

PRODUCT PROFILE
Brand The meaning of Muscle egg shake (MES) is a protein drink for muscle made from white egg. Therefore the name was chosen and believed easier to remember. The color combination of white and orange with a picture of strong arm was chosen to define the ingredients and the benefit. Product Ko` Budi regularly consults with Ade Rai for taste and quality improvement. He said, Ask the right and best person to get best advices. Muscle egg shake made from pure white egg and palm sugar with 5 flavors such as palm sugar, chocolate, raisins, coffee, coffee caramel and green tea. Thus the motto is The Natural Way to Get in Shape. It registered on health department and had three quality improvisations until now. Pricing and Packaging It packaged in a white 350 milliliters plastic bottle. Thus it is a ready to go drink and convenient to carry on. Just shake it and ready to drink. Sell at Rp.13,000.00 per bottle in the market and Rp.10,000.00 to re-seller and distributor.

Promotion and Distribution Channel Muscle egg shake (MES) has 5 days of life cycle and available in most of local gym in Bandung. The minimum online order is 10 bottles and within Bandung territory. The models for the product are Ko` Budi`s friend who are also athletes.

Photo: Fezi`s property with Handy and Budi permission

PRIME ANALYSIS
1. PRODUCTS/SERVICES/PROCESSES Prime Category Rating Facts from the case, knowledge, or reasonable assumptions

Superiority

Taste; Has five flavors (palm sugar, chocolate, raisins, coffee, coffee caramel and green tea) No eggs smell and taste Pure ingredients (real white eggs, water and palm sugar) Sweetness coming from palm sugar Palm sugar give energy boost (www.menshealth.com) Value; 20gr net protein inside 1 bottle Minimum and standard protein supplement in the market (www.meshealth.com) Homemade (no fat and cholesterol) Rp.13,000.00 per bottle with homemade style as value The 1st egg shake in Indonesia stated on the cover It might be right, based on the author knowledge it was true, while others are coming after it. However it successfully boost up the sales. Design; Bottle of 330 ml It is easy to carry on and ready to go White plastic bottle (aqua bottle) Minimalized but looks not good. It should have a better packaging e.g. in a cup or proper bottle.

Uniqueness

Concept; Just shake and ready to drink Similar with milkshake for texture Taste; No eggs smell and taste Raisins are added Raisins are very healthy as antioxidants (www.meshealth.com). Health department certified Licensing agreement No halal certification MES argued that there is no other ingredient besides white eggs, water and palm sugar. In addition, people know exactly where the natural proteins come from i.e. white egg. However, the author argued that it is essential to get halal certification as mostly Indonesian are Muslim. Fair on doing business. Respect competitor and follow the rules and norm on their promotion actions. Good relationship with supplier. It is a must in order to get the best eggs supplied. Actively attended events on the gym i.e. health supplement product socialization) Labeling The best protein for you, it was stated on the cover The author argues that it would be boomerang for MES, as it is potentially misleading information.

Protection

Ethicality

Readiness

Within Bandung city area only (unable to reach suburb) As it is natural, the main problem is MES will not be able to stay more than 5 days also have to store in chill temperature and no direct sunlight. Otherwise it shorten its life cycles and possibly broken. Daily limited production i.e. 20 bottles
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It could be good thing, so that will not be a waste also keeps it rare. However, there is possibility for customer turning to other products who always available MES business model is quite effective on generate revenues and operate its business. Has specific daily target sales i.e. 15 weekdays and 25 weekend With limited productions it continue making a profit. Innovative concept i.e. just shake it and ready to drink It is not east to be copy, as there is secret method to blend it well. Mouth to mouth and networking are very effective as promotion tools MES only focus with distributor or re-seller in Bandung city Unable to delivered product to outside Bandung city No reward for re-seller or distributor. It will be necessary to give reward for those who are able to achieve daily and monthly sales target

Business Model

2. RESOURCES Prime Category Rating Facts from the case, knowledge, or reasonable assumptions Supplier; Defined 0 Networking (eggs supplier, food distributor, bottle packaging) The best protein for you, the sentence is stated on the cove. However, there is no written or clear whether it is free range chicken and contain high omega. The natural way to get in shape, as it stated, there is possibility that people thought about it is organic white eggs. Therefore the author argued that it has to be clear for public education Employees; 3 (salesperson and production) Help from family members (administration and finance)

Distributor; Athlete (family member and friends) Funding; Own money

Accessible

Good relationships with suppliers, gym and fitness places, employees and distributor Teach and educate employees about product ingredients Regularly each of the employee are going to health seminar with Ko` Budi.

Minimized

Below the line promotion tool Using social media (twitter), mouth to mouth, friends networking. It is effectively work and cost nothing. No big and expensive machine for production Limited production daily Has only maximum 5 days life cycle

Sustainable Advantage

In terms of concept, competitor can easily imitate In terms of taste, it is not easy to imitate Looks easy and simple but there is a secret method to blend the
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white eggs well with water and palm sugar. No other substitute for the main ingredients i.e. white eggs 20gr net of protein coming from white eggs The standard of minimum protein supplement on the market (www.meshealth.com)

3. INDIVIDUALS Prime Category Rating Facts from the case, knowledge, or reasonable assumptions Ko` Budi able to focus on how MES could improve on taste and quality. Started from 2 flavors (palm sugar and raisins), and added 1 flavor every 3 months along with quality improvement Believe in the power of mouth and networking Communicate well with employee, good leadership style and good motivator for the team Low profile person Enthusiastic to explain MES to customer and ask their advice for quality improvement Has a good discipline in terms of setting the production time (morning) and number of production (20 bottles daily) Open with any critics, and always consult with expert i.e. Ade Rai as his mentor Trust his employees and develop them by asked them to go together to attend seminars

Skills

++

Traits

++

Started all his business with his own money Stick with three employees who are loyal to him since the beginning Failed few times in starting business such as distributor. Take a risk to create MES only within a month after attended Ade Rai Seminar Launch the product and wait the market response Learned from customer insight

Aspirations

++

Attended Ade Rai seminar in September 2011, and launched MES in October 2012 Learned from customer insight Quality improvement (taste, ingredients and method) Attended motivation and business seminars
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 Like to talk, ask, and share knowledge Previous entrepreneurial experience as baby product distributor Family history as entrepreneur Learned how to see opportunity and created opportunity Educational experience Using his networking relationship to promote, distribute and knowing more people in business

Relevant Experience

Synergies

Pure his own brand and own money. There is no other person who share or join the MES. Purely uses his strong networking to sell the product. Strong commitment with his entrepreneurship style Keep the production low and limited but generated steady revenue

4. MARKETS Prime Category Rating Facts from the case, knowledge, or reasonable assumptions Niche market Ko` Budi saw it as an opportunity to dominate the market especially Bandung. He believed that there is no other brand like MES in Bandung. Also people at the gym like protein but dislike to have white eggs. Thus MES offer the protein source that is natural and good taste.

Size

Targeting

MES has no specific target. It is created for people who either like fitness or not. Because basically people need protein daily. However the author argued that it has to be clear for whom. For instance the product has to be set for people who exercise but no supplement intake such as beginner. For those who need to maintain because of its extensive exercise, MES should offer higher dose of protein.

Reachability

It is available at the local gym in Bandung. Mostly their customers are people at the gym, as it is their prime target. Using social media online is good move. It would reach lots of people if with the right strategy. However, the problem is when people order it online or asked for the delivery. First it has short life cycle, second within Bandung city only, and last is only at local gym. This MES unable to anticipate it.

Other Choices

Strengths; Taste and concept (shake and ready to drink) Weaknesses; Packaging (plastic bottle) Within Bandung only Differentiation;
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a) The concept of milkshake style (shake and ready to go) Competitor such as Xpose (Jakarta) have the sugar separately, so that customer would adjust their sweetness, while Cifel (Bandung) has limited flavors (3) also it doesn`t blend well. Thus we could see the layer of water, sugar and the white egg itself. However, they both have better packaging, especially Xpose which has website, and products varieties such as cookies and different portion of protein products.

Needs

Provide basic needs of protein supply It is perceived as expensive while others sell at Rp.10,000.00 However, the value is ready to go concept (shake) and homemade style Everyone can have MES as a snacks or muscle recovery for people at the gym, especially body builder.

Growth

Steady growth for the last 3 months (August, September and October) Mostly 25 bottles per day are sold. The new flavor came from customer insight. Means it engages well with the customer. The demand was increased during Ramadhan. That was the time that they produce more up to 40 bottles and sold out in a day. Thus it becoming so popular recently. Protein blend is good for metabolism (www.meshealth.com).

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5. ECONOMICS Prime Category Rating Facts from case, your knowledge, or reasonable assumptions MES never lost its profit since its start up Being consistent with its 20 bottles production per day and have its target sales monthly. However there are no sales force actions. It seems that Ko`Budi quiet happy with the performance of MES Have a sample for those who come to the MES place or outlet. The business is profitable MES increases its sales growth in the first four months. The highest net profit was on August (Ramadhan). Break even point is reached in a very short term i.e. 4 months : Stable + It has been a year since the beginning and never gets lost. Using his own money and the break even point is fast The profit is being use to create new innovation on the flavor also to use hire a friend as a model for promotion. Purchase some machines for a better product

Forgiving

Rewarding

Enduring

MES made the flavor based on customer insight Study is taken from other competitor Consult regularly to Ade Rai for the innovation

Harvest Options

Activity; Available at local gym in Bandung city Product improvement for the ingredients from customer insight Join supplement product socialization event in gym on monthly basis MES should try to collaborate more with re-seller, distributor and especially gym in Bandung both of local and international franchise.

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EXISTING BUSINESS MODEL

(Osterwalder and Pigneur, 2010)

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EXISTING BUSINESS MODEL ANALYSIS

SWOT analysis is being used in order to analyze the existing business model of muscle egg shake.

Internal According to Osterwalder and Pigneur (2010), strength and weakness are coming from inside perspectives. They are the brand itself, the organization or the entrepreneur.

Strengths: Ko`Budi as the owner of Muscle Egg Shake (MES) has a strong entrepreneur history in the family. Along with his low profile personality made him easier to share his experience and show good leadership to the employees. In addition, his business skills made him able to see the opportunity that people need natural source of protein after work out or exercise. Using his networking, the product is able to enter local gyms in Bandung city. Moreover, it received good acceptance and create its market leadership for the local brand. Within a year, the brand is pretty solid as it promotes healthy lifestyle. Entrepreneurship is about making meaning (Kawasaki, 2004).

Weaknesses: For Ko`Budi, entered this industry is very new. It showed the inexperience of the entrepreneur that unable to put the brand positioning. MES has a problem as it made for everyone, in other words it created for mass market. It was a disappointed move. Positioning helps the company build a strategy based on its competition weaknesses (Trout and Ries, 2001). The five flavors that MES have taste similar. It has not much difference from one to another, thus the improvement should be made.

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External Opportunity: In Bandung, MES dominated the market for this protein shake drink. MES also has a very low cost for labor (3 employees), production and promotion (below the line). Ko`Budi used his networking for both of supplier (raw material) and distributor. Some of the distributors are owner of local gym, body builder and personal trainer. Indeed it helps to introduce the product and spread them to their clients. Thus he would be able to use most of MES`s profit to innovate the product i.e. flavor and ingredients. MES should gain partnership with international gym franchise in Bandung (Gold Gyms, Celebrity Fitness) and also actively sponsored sports event to get customer recognition.

Threat The competition is quiet high for supplement drink. Xpose and Cifel (both are local) are ready to get the take the market share. Especially for Xpose, based in Jakarta, has a more professional look such as website and product varieties. It also aggressively entered the international gym franchise i.e. Gold Gyms. In addition, the inability of MES to deliver the product outside Bandung (suburb and other cities) will soon create a problem. Last is that Xpose has variety on their product line, while MES only has one.

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FUTURE BUSINESS MODEL RECOMMENDATION

(Osterwalder and Pigneur, 2010)

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FUTURE BUSINESS MODEL RECOMMENDATION ANALYSIS

Environment analysis is being used in order to propose future business model. According to Osterwalder and Pigneur, environment analysis helps to choose competitive business model and to get strong.

Market Analysis Instead of going for mass market, it would be better go for youth and woman. a) Youth Youth are increasing in Indonesia. Based on the author experiences, most of people join the Gym and Fitness are youth around (19-25). Thus it is a huge market. They need the protein source to build their muscle and body. However they tend to use international brand that is recognized even expensive. Nevertheless, youth or young people are determined to try something new especially when the price is affordable. Once they like it and go to the their mind, they will definitely repurchase it.

b) Woman It is still very rarely a protein product for woman. It will give huge advantage if MES promote the product is healthy, no sugar and no cholesterol. However, taste is very important here. They rather not to have white eggs as their protein source, but in this milkshake concept, the market is there. Therefore, MES has to really careful to get this market, as the woman perfection of their taste and quality.
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Markplus conference in December, 2011 stated that, youth and woman are the champions for consumptions and both of woman and youth are now have a strong awareness of healthy life style. They might be starting to drink it as alternatives.

Industry Analysis The competition is increasing in this industry. Therefore MES has to be able gain partnership with big international gym franchise such as Celebrity Fitness and Gold Gym. Also play a role in supporting sports event will help to get customer recognition. Partnership should benefit and enhance both parties (Kawasaki, 2004). Viral marketing will bring benefit for MES. Using social media and Internet in order to capture and documented the customer experiences using MES. The strategy is believed to captures viewers attention and inspiring them to share with friends and family (Nalty,2010)

Future Challenge Halal certification will definitely worth. It will build the confidence of customer to consume it and also popular within the industry. It is the culture most people like sweetness on their drink. Thus MES has to be able to have a standard of its sweat to ensure the quality of the product itself.

Macro Economy MES has chance to add more employees in order to develop its business. Not only that but also to increase the service especially for delivery. It will not spend much as the labors are cheap in Bandung and not necessarily find a skillful one. From the conversation with Ko`Budi, he has planned to increase the price to be Rp.20,000.00. It is normal as the competition is higher now. However the value added has to be in the product, especially for the packaging, flavor and taste. People in Bandung might be accepted as long as they like the quality. Thus the customer insight is really helpful to create the next innovation.

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CONCLUSION

From the PRIME analysis, it can be concluded that muscle egg shake; Categories Product Resources Individual Market (Target costumers) Economic Rate + 0 ++ +

Muscle egg shake as a good business opportunity because; Niche market It has small competition in the market especially in Bandung. Stable cash flow Steady in the last 3 months and popular among local people Product innovation Engages well with the customers as the innovation based on their insight. Promote healthy life to public. I would love to invest in this business because; Small capital but steady return Fast break even point i.e. 4 months Unique concept but need new business model Natural protein source that ready to go with affordable price Labor No need special labor Niche market Huge potential as fitness at gym is lifestyle for modern people. It will create great profit if manage it well with the right strategy such as targeting, segmentation, promotion and the product innovation

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APPENDIX
A. Questions These are true questions given on the PRIME analysis template. Look beyond the facts of the case since we want to evaluate the opportunity from our standpoint (e.g., as potential supporters or investors), and not just whether the actors in the case think it is a good ide; 1. What is your overall analysis/evaluation of this business opportunity? 2. Is it a good business opportunity (yes or no)? Why or why not? 3. Would you invest in this opportunity? Why or why not? 4. What other information would you need to have to better make a decision? Briefly summarize the key points from your completed tables

B. Competitor

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REFERENCES
Kawasaki, Guy (2004) The Art of The Start, London: Penguin Books Markplus Conference December 2011, at Ritz Carlton Jakarta Nalty, Kevin H (2010) Beyond Viral , John Wiley & Sons Osterwalder, Alexander and Pigneur, Yves (2010) Business Model Generation, John Wiley & Sons Trout, Jack and Ries, Al (2001) Positioning: The Battle of Your Mind, McGraw Hill www.menshealth.com

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