Managerial Applications of Information Technology – IS535
DeVry University, Keller Graduate School of Management
December 4, 2014

Table of Contents:

Abstract……………………………………….….3
Company Background………………………….3
Problems…………………………………...........4
High Level Solution……………………………..5
Benefits of Solving the Problem(s) ……….…..6
Business/Technical Approach…………………6
Business Process Changes……………………8
Practices Used…………………………………..8
Conclusion and Recommendation…………….8
High-Level Implementation Plan……………….9
Summary…………………………………............9
References………………………………………..10

Abstract:
Vita Haus, LLC is a start-up company in the vitamins, supplement and sports nutrition industry. The business is virtually an unknown entity and the owner is seeking an affordable means of exposure to a target demographic market of fitness minded individuals aged 18-45. Since more than half of Americans use some form of nutrition or dietary supplement (Park, 2011), there is a sufficiently large group of individuals that will likely be interested in the business, but only if they are aware of it. Furthermore, the vitamin and supplement industry is one of the fastest growing business sectors in the United States and is expected to grow from about a $16 billion US market in 2012 to over a $20 billion US market in 2018. This is a 25% growth rate in only 6 years (Park, 2011)! To facilitate increasing awareness, various avenues of advertising are explored and social media demonstrates the greatest opportunities. Through this medium, the company can not only achieve an online presence, but can promote itself as the premier local fitness nutrition industry. To facilitate this, a hybrid of social media marketing and monthly contests will be used. The focus is to bring people into the physical location and drive sales both via internet and retail sales.

Background:
Vita Haus, LLC, which does business as Vita Haus Supplements, had its roots in a long-time vision of its owner to own his own business and to provide quality vitamins and supplements in a growing metropolitan area. Although the vision began to take form in 2012, it did not come to fruition until early 2014. Aaron Krahling, the owner, has been involved in the health and fitness industry for the past 20 years. He is a NASM Certified Personal Trainer, NASM certified Fitness Nutrition Specialist, and group exercise instructor. With this extensive experience, fitness contacts and business background, he determined that the niche of vitamins and supplements would be an ideal fit in an endeavor to capitalize on the increasing demand within the industry. Since he had been looking for a way to leverage his time and expertise within the industry, Vita Haus seemed a viable option. The online store-place was launched in early 2014 using the eBay marketplace and the retail store is expected to open in March of 2015, with the first location in Waldorf, MD. The retail location will be situated within a one mile radius of seven different fitness facilities. These fitness facilities boast a combined member base exceeding 10,000 individuals based on conversations with the owners. Also, within a five mile radius of the proposed retail location, there is a population of more than 67,000 individuals (City-Data, 2014). Vita Haus, LLC is properly funded for the upcoming retail venture and demographic research predicts a favorable outcome for said venture.

Problem:
While Vita Haus Supplements will carry the most popular products in the industry and will be price competitive with all of the other players in the local market, the company is not a household name and most people have never even heard of this business. The problem then is local exposure and visibility. While the location is on Route 301, a well-traveled highway with over 60,000 vehicles passing by per day (Maryland Highway Administration, 2013 ), this alone will not be enough to build and further sustain a customer base capable of keeping the company profitable. To complicate the problem, county laws prohibit off-site signage during the business week (Charles County Commissioners, 2012). Signage at intersections and along the side of the highway would bring greater attention to the business. Finally, because Vita Haus is a start-up business, the advertising budget is a mere $200 per month. Such a small budget precludes most types of traditional advertising mediums, but could deliver the desired impact through the use of social media. This forces Vita Haus to entertain a more creative approach using monthly prizes as incentives for others to do the advertising for them.

High Level Solution:
Direct marketing; in the form of visiting fitness facilities, posting flyers, and working out deals that are mutually beneficial to other fitness related local companies; will be explored. Technology will also be used for these purposes. An awareness of the company and their services and products will be brought about through the use of social media and contests. Vita Haus will use pay per click (PPC) advertising through Google Adwords (Dahl, 2009) to target individuals with local fitness related queries and Facebook PPC advertising to target only individuals in the area who are not friends or friends of friends on Facebook. The use of both a search engine and a social media medium will assure wider exposure to the target demographic population. The Facebook method will further narrow the target audience to avoid people seeing both a friend’s post pertaining to the business and also a paid advertisement. In addition to paying for the low conversion ratio of PPC advertising within the framework of Facebook and Google exclusively, a more personal approach will also be taken. People are more likely to look at things and consider products or services that are recommended by individuals they know and trust than they are based on general advertising. Word of mouth advertising and online marketing campaigns will be combined using Facebook and Twitter users as the main audiences. In an attempt to reach local residents interested in the fitness world and sports nutrition specifically, Vita Haus will launch monthly contests where customers will post a picture of them wearing a Vita Haus Supplements t-shirt doing something fitness related. The post will be tagged #vitahaus and the owner will choose the best picture each month and award the author of the post a $50 gift card for the retail store.

Benefits of solving the problem:
Through implementation of this plan, Vita Haus will gain exposure, build a loyal customer base, and increase retail revenues. People will start to recognize the Vita Haus brand and shop at the store. Benefits of solving the problem in the proposed manner will be the relatively low cost to implement the plan and the personalized attention that will be brought. People will only see the marketing efforts if they are “friends” of “following” the person who post the picture(s). The other people who are not “friends” of posters will be engaged using the PPC advertising campaigns that will run alongside the contest advertising. Simply put, the main benefit will be a chance at a profitable operation (Kokemuller, 2014).

Business/Techincal Approach:
Since over 80% of the target market of Vita Haus Supplements uses Facebook (Pew Research, 2014), it will be used as the primary advertising venue to gain exposure. As of right now, the cost per click (CPC) for most of the key words for Vita Haus Supplements falls between $1 and $3 per click (Priebe, 2014). This method will attract customers, many of which will be repeat customers, and will continue to attract customers as they are exposed to online marketing. Although word of mouth advertising is the most effective tool because of its personal nature, the augmentation of online marketing will further the effectiveness and scope of the marketing effort. Use of the previous stated advertising method has the added benefit of organic exposure in that they are not paid for and have a much higher conversion ratio than paid advertising (Hedges, 2014).
Vita Haus will use somewhat of a hybrid model combining social media advertising with monthly prizes. The total cost of advertising associated with monthly prizes is expected to be approximately two cents per person. Through the competitive process, the Vita Haus name will be marketed as customers wear tee shirts in their own interpretation of the Vita Haus brand. This helps to keep marketing costs low as it is much cheaper than PPC advertising. It is also much more personal. Since the advertising platform (Facebook and/or Twitter) is something that most people use already, there will be no need to drive people toward those mediums. The minimal cost to the company entails only the contest prize which is awarded as a $50 gift card. The cost to Vita Haus is only $25 as there is an average 100% markup on products. This is much cheaper than any other form of online or traditional advertising.

Business Process Changes:
Business process changes that may need to occur will be small but they do still exist. As the marketing strategy is implemented, there will need to be an unbiased party to evaluate the entries and choose a winner each month. This will be the manager, unless conflicts of interest occur. Also, a method must be developed to keep track of how effective the marketing strategy actually is. Any technical processes for tracking metrics will be outsourced. Finally, the store will need to have gift cards made up and have the point of sale system programmed to accept them. (Hiscott, 2013)
Technology or business practices used to augment the solution:
The technology used to increase market awareness of Vita Haus Supplements already exists in full in the form of Facebook and Twitter and the ability of defining and categorizing things by the use of hash tags allows for proper follow through on the business side. This also makes it possible to track the number of participants.
Conclusions and Overall Recommendation:
It is apparent that the most cost effective way to reach new potential clients within the local area of Vita Haus Supplements in Waldorf, MD is to use some form of social networking platform to bring attention to first the company’s existence then their products, knowledgeable staff, services and great prices. While PPC advertising is a possible solution, it is cost prohibitive. The same goes for traditional newspaper advertising. A combination of social media advertising and a monthly contest will be used to create exposure to the local fitness market.
I would recommend trying different prices for the awards or even a different number of smaller awards. People may be more willing to share if they believe they have a better chance of winning or if there is more to gain.
High Level Implementation Plan:
The social network marketing process will be implemented in several steps. The first will be getting Vita Haus Supplements tee shirts to as many customers as possible and also explaining the contest rules, hash tag to use and prizes. Next will be to have an employee of the company gather all pictures hash tagged #vitahaus at the end of each contest period and turning them in to the manager who will decide the winner each month. Finally the winner will be notified and awarded the gift card. Their picture receiving the prize will be taken and this will be posted to Facebook and Twitter bringing even more attention to the company and then everything will be repeated the following month.
Summary of Project:
Vita Haus will use social network marketing efforts through Facebook and Twitter posts in order to expand awareness of the company. This will be done by having customers and whoever else wants to be in the contest involved by taking pictures in a fitness related setting while wearing a Vita Haus Supplements tee shirt and posting the picture(s) to social media using the hashtag #vitahaus. The pictures will be gathered up by a Vita Haus Supplements employee and then the manager will then go over the pictures each month and choose a winner. The winner each month will be given a $50 gift card for in store use. This is believed to be the way to reach the most people locally who fit the target demographic for the least cost per capita while also putting a personal touch to the marketing efforts. Finally, the scope and reach of the marketing efforts will be evaluated and modified accordingly if deemed necessary.

References:
Charles County Commissioners. (2012, May 1). Retrieved December 3, 2014, from https://www.charlescountymd.gov/sites/default/files/commissioners/codehomerule/details/2012-07 Sign Regulations.pdf
CityData. (2014, January 1). Waldorf Maryland. Retrieved December 2, 2014, from http://www.city-data.com/city/Waldorf-Maryland.html
Dahl, D. (2009, October 14). Real Life Lessons Using Google Adwords. Retrieved December 3, 2014, from http://www.nytimes.com/2009/10/15/business/smallbusiness/15adwords.html?pagewanted=all&_r=0
Hedges, J. (2014, May 8). How does paid search marketing impact results from organic listings? Retrieved December 3, 2014, from https://www.internetretailer.com/2014/05/08/how-does-paid-search-impact-results-organic-listings
Hiscott, R. (2013, October 8). The Beginner's Guide to the Hashtag. Retrieved December 3, 2014, from http://mashable.com/2013/10/08/what-is-hashtag/
Kokemuller, N. (2014, June 13). What Are the Benefits of Marketing for Companies? Retrieved December 3, 2014, from http://smallbusiness.chron.com/benefits-marketing-companies-61300.html
Maryland Highway Administration. (2013, March 3). Traffic Volume Maps. Retrieved December 2, 2014, from CityData. (2014, January 1). Waldorf Maryland. Retrieved December 2, 2014, from http://www.city-data.com/city/Waldorf-Maryland.html
Park, M. (2011, April 13). Half of Americans Use Supplements. Retrieved December 7, 2014, from http://www.cnn.com/2011/HEALTH/04/13/supplements.dietary/
Pew Research. (2014, January 26). Social Networking Fact Sheet. Retrieved December 3, 2014, from http://www.pewinternet.org/fact-sheets/social-networking-fact-sheet/
Priebe, M. (2014, January 1). The Cost of Pay Per Click (PPC). Retrieved December 3, 2014, from http://www.proximitymarketing.com/on-average-how-much-do-pay-per-click-ppc-marketing-activities-cost/