Business and Marketing Plan November 2008 TABLE OF CONTENTS Page by yaoyufang

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									                                           Business and Marketing Plan
                                                 November 2008

                                               TABLE OF CONTENTS
                                                                                                                           Page

Executive Summary ........................................................................................................ 2
Company History............................................................................................................. 4
Problems and Opportunities............................................................................................ 5
Situation Analysis ............................................................................................................ 6
Target Markets .............................................................................................................. 13
Operational Objectives.................................................................................................. 16
Communication Goals................................................................................................... 18
Positioning..................................................................................................................... 19
Key Market Strategies ................................................................................................... 19
Overall Marketing Strategies ......................................................................................... 20
Experts Consulted......................................................................................................... 25
Board of Directors ......................................................................................................... 27
BUSINESS and MARKETING PLAN
           Yahara River Grocery Cooperative


Executive summary
On October 28, 2008, the Yahara River Grocery Cooperative (YRGC) held a special
meeting of its members. Approximately 110 members participated in the 2-hour meeting
that included a brainstorming session. The purpose of this meeting was as follows:

      To communicate to the members YRGC’s current financial situation
      To detail the operational and marketing plan developed by the Board of Directors
      that will be used to bring the co-op back to profitability
      To obtain feedback and ideas of how to improve YRGC’s shopping experience.
      To ask for financial and volunteer support
      To introduce the new interim management provided and funded by the Willy
      Street Cooperative

YRGC opened for business in March 2008 with strong sales totaling $88,531. April
resulted in strong sales as well, but the co-op experienced a precipitous decline from
that point on. The primary reasons for the significant decline in sales were pricing,
product mix, inadequate training of staff, and ineffective merchandising. During the
summer of 2008, several experts were consulted to analyze operations, including Mel
Braverman of Cooperative Development Services. In October 2008, YRGC terminated
its general manager because of an inability to implement recommended changes
offered by consultants and the Board of Directors. Following the release of YRGC’s
manager, Willy Street Cooperative agreed to manage YRGC on an interim basis (two to
four months).

Wynston Estis will serve as the interim general manager and will be responsible for
implementing this Business and Marketing Plan. The plan consists of significant
changes to YRGC’s pricing model, product mix, merchandising, staff training, and
marketing strategy. Winston brings 17 years of grocery and management experience to
YRGC and has the ability to implement the necessary changes required to bring YRGC
back to profitability.

The primary goal of this plan is to, within one year, generate the sales levels that YRGC
experienced in its first month of business. YRGC will conduct an aggressive marketing
campaign to bring former customers back into the store as well as new customers. To
accomplish the goals and objectives listed in this plan, YRGC will establish a price-
competitive image, improve the product mix by offering more local, conventional, and
specialty products, increase membership through education on the benefits of a
cooperatively owned grocery store, and improve the customer shopping experience
through intensive staff training.


                                   Page 2 of 28
YRGC is requesting a loan of $60,000 with a goal of raising a match of $55,000 to
$65,000 in cash and like-kind services.

Use of funds:

Pay down accounts payable                                         $30,000
   Marketing Activities                                            15,000
   Working Capital                                                 30,000
   Staff/Training                                                  15,000
   Capital expenditures                                             5,500

Goals and objectives
Yahara River Grocery Cooperative has the following goals and objectives:

   a. Increase weekly customer sales to $15,000 within 3 months and $19,000 within 9
      months.

   b. Secure $115,000 to $125,000 in operating capital through grants, loans,
      investments, memberships, like-kind services, and fundraising within 3 months.

   c. Hire a general manager who can train under Willy Street Cooperative
      management

   d. Improve vendor relationships by becoming current with payables and through
      proactive communications.

   e. Create a quality shopping experience by emphasizing fair and competitive prices,
      product education, and customer service with a customer satisfaction rate of 90%
      within 6 months.

   f. Infuse the community with the cooperative spirit by participating in community
      events and increasing community outreach.

Keys to success
The keys to success for YRGC include:

      Reputation: Every customer visiting the store will want to refer and recommend
      our mix of products to their friends and family and urge them to become
      members of the cooperative.
      Product and environment: Offer a variety of quality food products that include
      locally produced, specialty, and conventional items at competitive and
      reasonable prices in a clean and comfortable environment.
      Superior customer service: Knowledgeable, friendly service is of the utmost
      importance.




                                  Page 3 of 28
      Convenience: Customers can quickly find what they need at the cooperative for a
      fair price. YRGC will provide a more intimate and educational shopping
      experience with local and specialty products that larger groceries do not carry.
      Supportive membership: Rely on a loyal membership base that is invested in
      sustaining a community-owned grocery.
      Cooperation among cooperatives: The sixth principle of the cooperative model is
      to strengthen the cooperative movement by working together. YRGC has a
      strong support system consisting of Willy Street Cooperative in Madison, Basics
      in Janesville, and The Outpost in Milwaukee and the University of Wisconsin
      Center for Cooperatives and Cooperative Development Services.

Company history
In February 2007 the Yahara River Grocery Cooperative (YRGC) became incorporated
as a Chapter 185 Cooperative in Wisconsin, with individual incorporators and active
committee chairs serving as the first Board of Directors. After considerable research, a
2,500 square foot site in downtown Stoughton was selected for lease at 229 East Main
Street. Many consumers and local businesses endorsed the downtown site.

An open house at the storefront was held in April 2007 and more than 200 people
signed up as new members for a one-time fee of $75. In the following 10 months, 425
area residents became members of the cooperative, and after the store opened in
March 2008, an additional 320 households have joined. Currently, more than 950
households have purchased YRGC memberships.

YRGC opened for business on March 1, 2008. In the first six months of operation,
grocery sales totaled about $400,000. YRGC has employed 10 to 15 local residents and
paid $115,000 in wages. See Attachment 1 for more information on financial status.

Mission

YRGC’s strategic vision is to become an anchor business in downtown Stoughton. The
seven basic principals of the cooperative movement guide YRGC. It has focused on
three strategies to guide its process: customer service, consumer education, and
community building.

The cooperative’s mission “is to help grow a community of healthy individuals, a
vigorous local economy, and a higher quality of life for our members and residents of
Stoughton and Southeast Dane County through the values, products, services, and
outreach of a financially sound grocery cooperative.”




                                   Page 4 of 28
Problems and opportunities
Problems

Before YRGC opened its door for business, it failed to sufficiently educate potential
shoppers of the products that would be sold and the prices that are reasonable for those
goods. Namely, that organic food is often sold at a premium cost compared to
conventional food. Furthermore, YRGC did not implement an effective pricing strategy
and quickly developed a reputation as being overpriced.

Relying on an August 2007 survey of members, YRGC also overestimated the demand
for organic products and opened the store with a product mix heavily favoring organic
and natural products.

In addition, just as YRGC opened its doors the economic downturn and overall rise in
food prices made it more difficult for people to spend the extra money to support a small
grocery.

Despite having over 950 members, most have not changed their shopping habits and
there are about 300 who are regular customers. Sales have dropped to less than 50%
of original projections and are insufficient to cover operating costs. While YRGC has
developed a core customer base, the management of a competitive pricing strategy, a
product mix that limits sales to potential customers, and ineffective in-store marketing
have contributed to this trend of decreasing sales.

Opportunities

Despite start-up problems, the Stoughton community is eager for grocery options.
Membership in YRGC continues to grow with more than 300 joining after the store
opened in March. Stoughton is a spirited, community-focused city, and the majority of
YRGC members are committed to helping the store survive and grow.

The co-op network is strong in the Midwest, and YRGC has numerous resources to
count on for guidance and assistance. Willy Street Cooperative in Madison is an
immediate source of information and assistance, and the Board of Directors is working
with Anya Firszt, general manager; Lynn Olson, cooperative services manager; Dean
Kallas, merchandising manager; and Brendon Smith, director of communications. Also,
Basics Cooperative in Janesville has provided help and guidance. Other resources
include the University of Wisconsin Center for Cooperatives and Cooperative
Development Services. (See the list of experts/consultants at the end of this Business
and Marketing Plan.)

More importantly, however, is that Willy Street Cooperative has accepted the
responsibility of managing YRGC and helping train a permanent general manager.




                                   Page 5 of 28
Eating locally-produced food is important to YRGC’s shoppers. When YRGC
participated in the Buy Wisconsin Buy Local campaign for 2 weeks in September,
shoppers spent $4,300 on local products. Besides customer purchasing patterns,
responses from member surveys and focus groups indicate that local is an important
attribute of YRGC’s product mix.

By focusing on local and specialty items, YRGC can be seen as a niche or go-to-
destination rather than all encompassing. Also, “high quality” and “real food” are strong
attributes that resonate with customers, and are not viewed as strong attributes at larger
groceries.

Situation analysis
Market summary

The following market analysis and survey were conducted in 2006 and do not take into
account the current negative economic impact that the entire nation is experiencing.
When the Yahara River Grocery Cooperative opened its doors March 1, 2008, the price
of gasoline was more than $3 a gallon and climbing to $4 and the U.S. was wrestling
with the worst food inflation in 17 years. Prices for staples such as bread, milk, eggs,
and flour were rising sharply, surging in the past year at double-digit rates, according to
the Labor Department. Milk prices, for example, increased 26% over the year. Egg
prices jumped 40%.

   Grocery Store Market Analysis – Vierbicher Associates

       Market description:
             Stoughton population estimated at total 9.2% growth over next 5 years.
             Market extends beyond Stoughton to include towns of Oregon, Evansville,
             Edgerton, Cooksville, McFarland, Utica as well as townships of Rutland,
             Dunn, and Pleasant Springs.

       Income and grocery spend:
            Median household income expected to rise about 15% over the next 5
            years (3% annual).
            7.9% of income is spent on food at home.
            Grocery spending is estimated to grow by about 26% in next 5 years.

       Grocery market characteristics:
             Significant leakages (measure of consumer demand).
             Liquor stores and specialty food stores exhibit negligible leakage.
             Competitors include:
                o Pick ‘n Save – Stoughton, 49,500 sq. ft.
                o Pick ‘n Save – McFarland, 46,000 sq. ft.
                o Bills Food Center – Oregon, 46,000 sq. ft.
                o Piggly Wiggly – Edgerton, 46,000 sq. ft.


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            o Copps – Monona, 56,000 sq. ft.
            o Wal-Mart Supercenter – Monona 81,500 sq. ft.
            o Basics – Janesville (size unknown)

  Stoughton area characteristics:
        Strong community spirit – tornado recovery, church fire recovery, thriving
        downtown, strong arts community, Main Street Program, strong
        promotional push from Chamber.
        Three planned neighborhoods east of the Yahara River.
        Substantial senior housing in east Stoughton including Vennevoll campus
        of Skaalen Home.
        Large employers on east side of Stoughton – Stoughton Hospital, Skaalen
        Nursing Home, and Stoughton Trailers.

  Market potential for new store:
        25% of food budget can be captured within 3 miles.
        15% of food budget within 5 miles.
        $6MM of business available in 2005.
        To differentiate, must compete on convenience, specialty items and
        services in addition to staples.
        To have a chance, must build identity and a loyal customer base before
        Wal-Mart comes in.
        Organics offer an attractive niche – 20% growth rate annually.

YRGC Customer Interest Survey

        More than 1/3 (36%) of respondents drive more than 10 miles to shop for
        food, indicating dissatisfaction within this group with current shopping
        options.
        About half (51%) of respondents preferred the east side, 33% downtown,
        and 16% were indifferent.
        About three-fourths (73%) of respondents spend more than $50 per week
        on groceries. It appears the remaining 27% spending less than $50 are
        mostly seniors.
        Fresh produce, fresh meat/deli, and dairy products were the three highest
        shopping priorities with these respondents.
        High quality and good prices were the two highest motivators in grocery
        shopping with these respondents. Even so, there is a strong call for
        organic/natural among select individuals (28%).
        Fifty-nine percent or 215 of respondents indicated they would be
        interested in membership. The other 41% could be divided into two
        camps: “not interested in a co-op” and “perhaps, tell me more.”
        Food delivery, while it may be an important service to a select market, did
        not register as being important with these respondents.
        Seventy-one percent of respondents indicated they would shop at a co-op
        at least once a week.


                             Page 7 of 28
Competition analysis

  Local stores
            Pick ‘n Save (49,500 sq. ft.)
            Cheesers (size unknown)
            Jacobson Brothers Meats & Deli (size unknown)
            Kwik Trip Convenience, east and west side (sizes unknown)

  Traditional stores outside Stoughton
            Copps (Monona, 56,000 sq. ft.)
            Bill’s Food Center (Oregon, 46,000 sq. ft.)
            Pick ‘n Save (McFarland, 46,000 sq. ft.)
            Piggly Wiggly (Edgerton, 46,000 sq. ft.)
            Wal-Mart Supercenter (Monona, 81,500 sq. ft.)
            Woodman’s (Madison, 56,000 sq. ft.)

  Natural/organic food stores outside Stoughton
            Basics (Janesville)
            Willy Street Coop (Madison)
            Whole Foods (Madison)
            Trader Joe’s (Madison)

Strengths and weaknesses of Yahara River Grocery Cooperative

  Strengths

  1. Higher quality
        Inherent in product types and selection

  2. Locally-produced items
        More than any other local retailer
        Able to work with many small food producers in southern Wisconsin
        Note: Wal-Mart is adding Wisconsin-produced products

  3. Selection of organic and natural foods
        Better and broader than competition
        Note: Pick ‘n Save has added an organic section and Wal-Mart offers organic
        products

  4. Bulk items
        Bulk is not offered anywhere else locally

  5. Location convenience
        No long drive to Madison or Janesville
        Near the post office, library and bank


                                 Page 8 of 28
6. Convenience market appeal
     Downtown residents run in for a few items as needed
     Easy access for walk-by and drive-by traffic

7. Specialty dietary needs
      Large selection of gluten-free, soy-free, wheat-free products

8. Extra services
      Carry out groceries, delivery to senior members, special orders, classes,
      hootenannies

9. Small store size
     Easy to navigate, not a big box (“You don’t need a map to shop the Co-op!”)

10. Neighborhood feeling
       An integral part of the fabric of the community
       Contribute to the vitality of the downtown area
       Space to enjoy coffee and biscotti

11. Shopping experience
      Unique, enjoyable, comfortable

12. Open to all
      Not just members

13. Member loyalty
      They have a stake in its success

14. Community control

15. Community input

16. Community investment

Weaknesses

1. High price image
      “Sticker shock” at opening has discouraged many shoppers from returning
      Failed to implement an effective pricing strategy
      Price checks were with area organic/natural foods stores but rarely with Pick
      ‘n Save and other specialty stores (Cheesers or Jacobson’s) in Stoughton




                                Page 9 of 28
2. Too much emphasis on organic, natural, gluten-free
      Few familiar items and traditional shoppers felt out of place or in an “alien”
      environment
      Sometimes just want a “convenience” item such as a can of soup
      Need to find a blend of product choices

3. Inconsistent quality in produce department
      Lower sales cause greater shrink
      Need to determine better product mix

4. Limited deli or fresh meats
      Rely on member-volunteers to prepare deli items

5. Competitive prices
     Can’t take advantage of volume buying like big box and corporate stores
     Not a member of National Cooperative Grocers Association (NCGA)

6. Unable to find “niche”
     Trying to be too encompassing

7. Not Main Street Market
      Failed to educate members about the more natural/organic product mix and
      cooperative model

8. Trust
      New, untested; people may be wary of a cooperative
      Considered the place where “hippies” shop

9. New business
     Learning curve reduced effectiveness in opening months

10. Not enough operating capital
       Higher prices for product ate up available capital more quickly than budgeted
       Unable to obtain additional funds through grants

11. Location
       The chosen location does not fit all needs, and some people complained

12. Grocery selection
       Square footage limits number of items offered

13. Parking
       Perception of lack of parking and inconvenience (especially for seniors)




                                Page 10 of 28
Trends

    The market1
         Rising energy costs
         High food-at-home cost inflation and other economic pressures
         Increasing credit/debit card interchange fees
         Food safety issues
         Regional flooding
         Farm Bill increases organic crop research
         Continued buyouts of natural foods independents
         Organic semi-accepted (becoming more mainstream)
         Local and green the new things

    Organic food prices2
          Sourcing issues will put upward pressure on natural and organic prices
              o Demand is high for grains; commodity cost increases create no
                 incentive to convert to organic
              o Organic fruits in short supply; global supply shortage of organic items
                 is significant, ongoing issue with no relief in sight
          Health and safety concerns will boost organic sales
              o Food contamination, production, and country-of-origin issues will
                 receive media attention
              o Mainstream media is reinforcing link between health and quality of diet

    Consumer reaction to rising prices of organic/natural foods
         Those who consider organics and local food an extravagance or a treat may
         curtail purchases
         Consumers may buy less food, but will not compromise their values (e.g.,
         health, wellness, sustainability, etc.)3
         Less eating out, more cooking at home4
         Prepared foods can present themselves as the “discount restaurant meal”

    Growing focus on price5
          Price is over-riding factor in store choice: 37%
          Price is very important: 73%, up from 62%
              o Ahead of high-quality meat and store cleanliness
          Location importance also increased significantly (related to the higher price of
          gasoline)
          Price is the primary means of comparison for new products followed by
          nutrition information
          Shoppers increasingly seek out coupons and specials

1
  NCGA Trends Report Update, March 2008, citing UNFI forecasts
2
  NCGA Trends Report Update, March 2008, citing UNFI forecasts
3
  Hartman Group, Hartbeat Newsletter, June 2008
4
  Food Marketing Institute, 2008
5
  Food Marketing Institute, 2008

                                         Page 11 of 28
    Rising prices change habits6
           Grocery shopping:
               o 67% buy fewer luxury food items
               o 48% purchase fewer food items
               o 40% purchased more canned and frozen items
           Eating habits:
               o 71% cook more and eat out less
               o 58% use leftovers more
               o 46% eat out at less expensive places

    Organics vs. fresh/local7
          Fresh/local trumps organic
          Organic may be cresting in popularity
          Fresh and local implicitly associated
          Besides freshness, “buying local” means supporting the “little guy” (not
          corporations) and supporting local communities
          Whole Foods, Wal-Mart, and Metcalfe’s are aggressively promoting their local
          products
             o Metcalfe’s recently posted an ad that said it had 21 local bakeries
                  represented in the store and another ad promoting its locally-farmed
                  trout

    What consumers will want8
          Unique flavor combinations that exude high quality
          Products that support active and healthy aging and balanced sources of
          energy
          Supplements in foods and beverages (like glucosamine for joint health
          incorporated into functional beverages)
          Premium products
             o 94% of households indicate they use the same brands or products for
                everyday occasions as they use for special occasions
          Transparency – where products from, how made, etc.
          Concerns about food safety addressed
          Improved shopping experience (not necessarily faster or less complicated,
          but more interesting)
          Fresh products

    What consumers DON’T want9
          Female shoppers: lack of help
          Male shoppers: an out-of-stock product
             o Both of these were cited as main reasons for not returning to the store

6
  Food Marketing Institute, 2008
7
  The Hartman Group, 2008
8
  The Hartman Group, 2008
9
  The Harman Group, 2008

                                   Page 12 of 28
               The perception that the food was produced by the global food production
               system
               Despite what surveys say, not one-stop shopping

       On the downslide10
             Products with HFCS, additives, preservatives, artificial colors or flavors and
             “otherwise unknown ingredients,” processed foods high in fat, etc.
             Carbonated soft drinks
             Bottled water
             “Better for you” versions of dated, staples such as macaroni and cheese,
             turkey sandwiches, spaghetti, etc.

       Cultural trait projections11
                    Cultural trait                   Then            Now                        Next
             “How I approach my            Repair              Prevent              Live free
             physical health…”
             “I want my food fast…”        Fast food           Fast casual          Authentic convenient
                                           (McDonald’s, Taco   (Panera, Chipotle)   (taco trucks, falafel
                                           Bell)                                    carts, lunch trailers)
             “How I make a meal…”          Frozen dinners      Local                Grow your own
             “My diet looks like…”         Lite, low carb      Healthy diet         Real food
             “Where I want to shop…”       Mom and pop         Mass retailers       Customized small
                                                                                    footprint and home
                                                                                    delivery


Target markets
Who shops at Yahara River Grocery Cooperative?
In July 2008, YRGC conducted a survey of its 945 members and had a 27% response
rate. The following composite descriptions of who shops at YRGC are based on
analysis of the numeric responses to that survey.
Average shopper
The co-op’s average shopper is a middle-age female who usually shops at least once or
twice a month. At least one-third of these shoppers will shop weekly if not more often.
Half of them live on the west side of Stoughton and the other half are equally from
central, east and rural Stoughton. At the most, they are spending 25% of their normal
food budget at YRGC. Their shopping time and day vary quite a bit. Mornings (before
noon) and later in the week (after Tuesday) are most popular.

The average shoppers value quality goods, locally produced products, and member
ownership as their key reasons for shopping at YRGC. So far they have found the
quality of goods to be good or excellent. They are big on special sales and 75% of them
will shop next week. Slightly under half of them have suggestions to make in these food
categories: dairy, meat/fish, frozen, produce, and bulk.

10
     The Hartman Group, 2008
11
     Hartman Group, Hartbeat Newsletter, July 2008

                                             Page 13 of 28
When they don’t find what they want at YRGC, about a third will substitute another
product, 40% will ask for it to be stocked, and 75% will go elsewhere to find it. Usually
this other store is Pick ‘n Save, but about an equal third will go to either a big box store,
Whole Foods, or Willy Street Co-op. The suggestions for increasing their patronage at
YRGC emphasize more local, deli, and sales items. About half of them feel that YRGC’s
product mix should be 50% organic and 50% conventional.

Convenience shopper
Because YRGC is located in downtown Stoughton, it has a more convenience factor for
those living in that area. When comparing the average shopper to the convenience
shopper, the following differences emerge:
   •   The age of convenience shoppers tend to be in the young-adult and early middle-
       age range.
   •   They shop more than once a week almost half the time.
   •   They are not satisfied with their shopping at least 25% of the time. (Surprisingly,
       15% of them find the quality at YRGC poor while the average shopper only found
       it poor 5% of the time.)
Both the convenience shopper and the average shopper agree on the three values of
YRGC: 1) quality, 2) local, and 3) member owned. Convenience shoppers, however,
place a higher value on convenience than on weekly sales, and yet they are more
interested in lower prices than YRGC’s average shoppers. They also are more likely to
seek products at Whole Foods, Willy Street Cooperative, and Trader Joe’s.
Organic shopper
The organic shopper at YRGC is a mix of younger adults through pre-retirement folks in
about equal amounts, and is even more likely to be a woman than YRGC’s average
shopper. So far, organic shoppers have been satisfied or very satisfied 75% of the time,
and shops weekly or more than weekly 60% of the time. The organic shopper tends to
spend at least a third of her food budget or better 40% of the time at YRGC.
Organic shoppers highly value the “health criteria” of their food and connect that to it
being organic. They share the three major values of YRGC identified by the average
and convenience shoppers: 1) quality, 2) local, and 3) member owned. When they don’t
find what they want at the co-op, organic shoppers will request the item.
Balanced (50% organic and 50% conventional product mix) shopper
The balanced or more conventional shoppers want a 50% organic and 50%
conventional product mix at YRGC. This group includes more older adults or seniors
and fewer of the early adult group as compared to the organic shopper group.
Balanced shoppers have been satisfied and somewhat satisfied about 75% of the time;
however it should be noted that this group also had a 19% response of “Not Satisfied.”
Balanced shoppers are equally divided in shopping the store once a month, twice a

                                    Page 14 of 28
month, and weekly. They spend at least a third of their food budgets about 10% of the
time.

Balanced shoppers are not focused on “health criteria” and rank “organic” much lower
than other groups. They do embrace the same three major values of YRGC as the
average, convenience, and organic shoppers.

Who needs to be reached to fulfill marketing objectives?
Primary target
   Core customer base
      Build upon YRGC’s core customer base – the current loyal shopper and member
      who “gets” the value of community-owned store and the cooperative concept.
      This base consists of the average shopper and the organic shopper who value
      quality goods, locally produced products, and member ownership as their key
      reasons for shopping at YRGC. The organic shopper is concerned about the
      health benefits of food and connects that to it being organic. This base group
      shops regularly at the cooperative and spends about 1/4 to 1/3 of its grocery
      budget there.

   On-the-fringe customer
     Encourage the convenience and balanced (50% organic and 50% conventional)
     shoppers to spend more and shop more often at YRGC. This shopper is more
     interested in lower prices and is not focused on the health benefits of food. They
     do share the same three major values of YRGC as the core customer base.

   Price-conscious members
       Win back members who are more sensitive to price and want a more
       conventional grocery. This shopper wants a “choice” and often points to the Main
       Street Market model. Many cite high prices and unfamiliar organic products as
       reasons why they do not shop at YRGC.

   Health-minded families and individuals
     Persuade more health-minded shoppers to shop at YRGC. Although health
     conscious and aware of nutrition, this shopper is concerned with tight budgets
     and the current economic crisis. Many may already be members (about 1,200) of
     the Willy Street Cooperative who live in the Stoughton area.

   Seniors
     Continue to work with the senior citizen population, which is aware of and
     appreciates YRGC’s values of quality, local and member-owned. Most live on
     fixed incomes, however, and are very price conscious. They appreciate
     exceptional convenience and service, i.e., help carrying out their grocery bags
     and home delivery.




                                  Page 15 of 28
Secondary target
       Stoughton residents who work in Madison and shop in Madison on the way home

       Traditional middle-class families

       Out-of-towners who work in Stoughton

Operational objectives
YRGC must redefine itself in the community. Creating a price competitive image is
essential. YRGC must continue to service and support those who shop regularly,
expand the customer base through a strategic product mix and competitive pricing to
meet both the store’s operational and service goals for the community.

Product mix
      Increase inventory with locally produced items, working in advance with local
      food producers to acquire the best quantity and quality of in-season produce.
      Expand relationships with local producers of meats, cheese, grocery, and bakery
      items.
      Expand conventional grocery, produce and meat departments by 20%.
      Insist upon total quality and nothing less from the produce department (the No. 1
      product-related reason why people choose a grocery store).
      Increase selection of specialty products that cannot be purchased elsewhere in
      Stoughton (olive bar, local dairy products, dried meats, specialty Wisconsin
      cheeses and wines, soft ice cream machine, etc.)
      Expand the “grab-and-go” deli items such as ready-to-heat soups, salads,
      sandwiches, and other prepared foods.
      Improve and expand the bulk grocery section, adding more pasta, rice, and bean
      options and bulk items such as maple syrup, laundry detergent, shampoo, etc.
      Add an inexpensive line of vitamins such as the brand NOW.

Pricing strategy
       Maintain and promote a core selection of staple products at competitive prices.
       Market these items as “everyday prices.” Pricing on these staple products must
       be within 10% (above or below) of the competition.
       Maintain two price points for staple and local products: offer a price-sensitive
       product as well as a higher quality alternative.
       Select key products that serve as “loss leaders” that are priced at cost or slightly
       above cost.
       Maintain sustainable margins on organic produce, specialty, bulk, and deli
       departments.
       Continue weekly specials and coupons with more emphasis on items of most
       interest to target markets.
       Identify and sell slow-moving products at a lower sales price and then
       discontinue those items.



                                    Page 16 of 28
      Be proactive in completing regular price checks of YRGC products against
      market price in area stores. Store managers will regularly visit local grocery
      stores to check prices and gain ideas about new products and merchandising.

Raise capital
      Increase membership: register 255 new members for a total of 1,200 members.
      Promote donations and certificates of investment: ask 200 members to donate or
      invest $200 each.
      Identify and apply for loan and grant opportunities: use membership fees,
      donations, investments, and sweat equity as dollar-per-dollar match to secure a
      Dane County Planning and Development loan for $60,000.
      Continue to sponsor fundraising and community-oriented events such as the
      winter walk/run and the fall chili cook-off.
      Recruit volunteers from the membership to adopt projects and donate their
      services to complete them. (i.e., install the conveyor belt, minor repairs, etc.)

Operations
      Hire a general manager who will train with an interim manager from Willy Street
      Cooperative.
      Work with Willy Street Cooperative to review staffing budgets and hire 3-4 staff
      that will effectively balance labor budgets with operational needs.
      Develop, with the help of Willy Street Cooperative, a variable margin analysis of
      products that will produce a 35% gross margin.
      In November, conduct a “re-set” of our products. This process will be led by Willy
      Street management and includes re-merchandising the entire store inventory.
      Improve relationships with local food producers to acquire quality products.
      Recruit more volunteers from the membership to work regular shifts at the store.
      Implement the use of spreadsheets provided by Willy Street Cooperative to
      effectively manage purchases/inventory cycle (particularly related to local
      vendors).
      Pay down accounts payable by 50%

Shopping experience and customer service
     Create a customer experience through product and vendor education and
     exceptional service.
     Improve customer’s checkout time.
     o Create a PLU list for produce for each register to reduce amount of time taken
         to locate codes for items.
     o Ensure that a cashier is stationed near the front at all times so customers do
         not have to wait or search for a cashier.
     Emphasize staff training in the following areas: product knowledge, cordial
     customer communications and relations, and team and morale building.
     Work with staff from the Willy Street Cooperative to conduct more training
     sessions with the YRGC staff, management, and Board members.
     Improve in-store marketing.



                                  Page 17 of 28
      Conduct regular checks of items for product rotation, correct pricing on items,
      etc.

Community involvement
    Maintain commitment to community events and sponsorships.
    Continue community initiatives such as S.N.A.P. (Stoughton Non-Profit
    Assistance Program) and Saturday morning music hootenannies.
    Continue and increase participation in the downtown Stoughton merchant
    association and Chamber of Commerce activities.

Communication goals
The marketing plan outlines what needs to occur to meet sales objectives. This is
typically characterized in terms of a response desired from the target audience.

There are three basic responses that marketing can affect: 1) awareness, 2) attitude,
and 3) behavior. These three responses build on one another with awareness being the
foundation. Once an individual is aware and understands something, they can then
develop an attitude toward that thing. And only after they have formed an attitude will
behavior or action occur (such as the decision to become a member or to shop weekly
at YRGC).

All messages and marketing activities try to affect one or more of these responses, as
part of an overall mix of marketing activity. The following objectives are aimed at
building awareness, changing attitudes, or affecting behavior:

   Awareness
   1. Communicate regularly with YRGC members and target audiences through such
      communications tools as the weekly eblasts, print advertisements, fliers,
      newsletters, in-store handouts and membership meetings.

   2. Reach members of Stoughton service and civic groups, as well as church and
      school groups with information.

   3. Generate basic understanding among the target audiences about the grocery
      cooperative and its benefits as measured by a follow-up survey issued in August
      2009.

   Attitudes
   1. Convince members and shoppers that the store’s prices are fair and in line with
      other stores in the market area. (Work to dispel the high price image.)

   2. Convince the target audiences that the cooperative is a store at which they would
      like to shop.




                                  Page 18 of 28
   3. Create favorable buzz and interest within the community as measured by 3 in 5
      people knowing about and having favorable opinions of the grocery cooperative.

   4. Dispel one-stop shopping mentality.

   5. Convince members and customers that shopping at and supporting the
      cooperative keeps their money in the local economy.

   6. Make the public aware that the cooperative is open to everyone – you don’t have
      to be a member to shop there.

   Behavior
   1. Convince those who are suffering from “sticker shock” to return to the
      cooperative and purchase a variety of products at lower prices.

   2. Convince those wary of a grocery cooperative to shop at the store and see for
      themselves how the store meets their needs.

   3. Make the store a place where people will want to go out of their way a little to
      pick up a special item.

   4. Create various opportunities for individuals to become members and become
      invested in their community-owned grocery.

Positioning
Convince potential customers that the Yahara River Grocery Cooperative is best at
meeting their needs for superior quality, competitive prices, friendly service,
healthy lifestyle, convenience, and a sense of community because it is the only
grocery that delivers precisely the products, services and programs members desire
based on each member having a vote.

Key marketing strategies
      Redefine the Yahara River Grocery Cooperative as a viable grocery alternative
      that fulfills the unmet needs within the community.

      Place primary emphasis on creating a price competitive image through
      education, promotions and other incentives, and in-store merchandising to
      encourage price conscious consumers to shop at YRGC.

      Change the target audiences’ shopping habits by offering “gotta have” products
      that bring customers in for them again and again and by promoting service and
      shopping convenience.




                                   Page 19 of 28
      Create a product mix with competitive prices and a shopping environment that
      exceeds customers’ expectations, which, in turn, will increase repeat customers
      and word-of-mouth referrals.

      Build upon YRGC’s three major values – quality goods, locally produced
      products, and member ownership – to increase sales, membership, and
      investments. (These are the three values listed by current shoppers as the
      reasons they shop at YRGC.)

      Conduct a successful fundraising drive of membership and core customers as a
      “quick fix” for YRGC’s operational cash losses and to provide working capital to
      meet projected needs.

      Create a quality shopping experience by coupling quality local and real foods at a
      fair price with good service and the warm feel of a neighborhood market.

      Maintain YRGC’s presence in the community by continuing to sponsor events
      and being a vital part of the downtown business community.

Overall marketing strategies
With little budget and a desire to show the community that YRGC spends wisely, the
cooperative will use low and no cost techniques to promote the grocery.

Events
      Promote “under new management” and create an event with new management
      specials, coupons, and specialty items.
      Hold an open house so members can meet the interim manager and new general
      manager.
         o Write a press release about the new management arrangement.
         o Do a questions and answer interview with the new management in the
            newsletter.
         o Promote through the weekly eblast.
      Hold a grand reopening to showcase the changes after they have been made.
      Promote competitive prices and any new local or specialty products.
         o Work with vendors to promote local products.
         o Place ads or an insert in the newspaper and shopper.
         o Send special invitations to members. Invite them to a special sneak
            preview to sample new local products or specialty items.
         o Invite media to attend the event.
         o Write and distribute press releases about the changes.

Message
     Continue using the tagline “your grocery” to brand YRGC as a community-owned
     store.



                                 Page 20 of 28
      Promote positive value-focused messages in line with being a good community
      member and neighbor; refrain from negative comparisons to competition.
      Promote an “open to all, appeal to all” message; refrain from appearing exclusive
      or in any way alienating.
      Use current trend information to influence message. (i.e., promote fresh, local
      products, etc.)
      Stress the importance of shopping locally and point to saving on gas and time.
      Promote the convenience of shopping at the co-op: ease of shopping – quick in
      and out – without overwhelming aisles.

Target markets
      Focus on a few high-return target markets rather than the entire community to
      maximize effort and return.
      Create a program aimed at attracting to the YRGC the 1,200 Willy Street
      Cooperative members who live in the Stoughton area.
      Create an educational promotion that demystifies cooperatives and creates trust
      and trial by hesitant community members.
      Create a senior outreach program that educates, demonstrates value, and
      convinces seniors to use the new store.

Product mix
      Promote conventional items at attractive prices to reintroduce alienated
      customers to the store.
      Educate members and customers about ways to use and the benefits of eating
      unusual and specialty products such as garlic sprouts. Use in-store handouts and
      the weekly eblast with links to the web site; include recipes and suggestions for
      how to incorporate the products into meal preparation.
      Use shopper testimonials such as the “What’s your favorite thing to buy at the co-
      op?” in the weekly eblasts.
      Note new grocery items with a shelf sign, on the web, in the eblasts and in the
      newsletter.
      Tie in with community events – fall gallery walk, offer special food packages for
      art enthusiasts (Wisconsin beer, cheeses and hors d’oeuvres).
      Identify and publicize the use of high quality product vendors, including local
      vendors.

In-store marketing
       Use the windows effectively; improve signage and keep clean and uncluttered.
       Continue to use sandwich boards to call attention to featured items.
       Brand sections of the store, such as the produce area and the bulk area, to call
       special attention to them.
       Highlight what is in season on the blackboards above the produce department
       and in the window.
       Develop better signage for the aisles.
       Laminate permanent signs such as “Local” and “Miles to Market.”
       Change color of sales signs so they stand out from in-store design.


                                  Page 21 of 28
      Encourage local vendors to distribute product information and work with them to
      create information such as bios, photos, product selection, and availability.
      Continue to use the registers to advertise products, events, and values.
      Emphasize cooperative benefits in the store – put the 7 cooperative values on
      the stairs, on the register screens, etc.
      Promote the use of the public space.

Shopping experience
     Welcome shoppers with great produce and prices – 99 cent organic bananas is
     not an incentive for the average shopper who is not familiar with organics or fair
     trade.
     Promote grocery items that members and customers request with shelf channel
     signage that says “By your request.” This lets members know that the YRGC
     listens and responds, and also points out when a new item arrives.
     Create a campaign to change shopping habits. For example, encourage weekly
     shopping with a punch card and reward system.
     Offer more extensive product samplings, recipes, and education on how to
     prepare the store’s products.
     Create a customer comment card to rate customer service and store
     atmosphere.
     Clean up the balcony area and other areas of the store including the kitchen,
     community bulletin board, and entry.
     Paint the exterior of the store.
     Use bag stuffers more effectively.
     Offer educational seminars on food safety, cooking classes and other subjects of
     interest to target markets.
     Locate the suggestions box in a better area with comment sheets, pens, etc. Set
     up a staff or member volunteer system to contact and answer all suggestions.
     Install a fold-up changing table in the women’s bathroom.

Membership
    Communicate regularly with membership.
    o Send weekly eblasts to members.
    o Change the member newsletter from a quarterly to a bi-monthly publication.
         (Direct mail is costly but effective.)
    Hold specific sales for members only, member only tasting events, added perks
    and samples, and member appreciation days.
    Create a bring-a-friend campaign with an incentive or coupon if the friend joins
    YRGC.
    Develop a business membership that companies could give to their employees,
    i.e., either a discounted or temporary membership.
    Maintain a YRGC presence and membership information table at community
    events.
    Continue research into viability of changing membership discounts to a patron
    rebate program that pays dividends when the store is profitable and to avoid
    decreasing income when the store is not profitable.


                                  Page 22 of 28
Raise capital
      Create a capital campaign with a cause: “To raise a dollar-for-dollar match” for a
      loan and capital.
      Promote certificates of investments and other options.
      Ask members and shoppers to CAP up for YRGC at the cash registers in the
      store.
      Solicit funds using the fall 2008 newsletter with a return form that members can
      complete, indicate the amount of their investment or donation, and drop by the
      store.
      Develop and use a calling tree (personal phone calls from Board members and
      other key members) to contact the membership for monetary contributions.
      Promote the purchase of holiday gift cards and buying a friend or family member
      a membership card as a gift.
      Promote the campaign and track the progress in the weekly eblasts.
      Create a “thermometer” type of sign in the window to track the money raised.
      Co-sponsor a benefit event at the Stoughton Opera House such as a holiday
      “radio show.”
         o Sell tickets at the store and promote the show through the web site,
              eblasts and newsletter.
      Sponsor in cooperation with the Victorian Holiday committee the first “Dickens of
      a Run and Walk.” Ask participants to secure pledges to run or dress in holiday
      garb.
         o Set up an online registration and link from web site.
         o Promote with eblasts, newsletter, and posters.
         o Have registration forms available in the store and in downtown
              businesses.
         o Hand out information about the co-op and the run at the Victorian Holiday
              booth at the annual Women’s Expo in Madison.
      Hold a winter benefit event such as an auction or a soup supper featuring local
      products or celebrity chefs.
      Ask members to temporarily decline their 5% discount.
      Use “purchase” or “credit” cards to create capital to be used for purchases.
      Solicit member volunteers to paint the storefront and other repairs and to work at
      the co-op and log their service or time as sweat equity.

Community outreach
    Find ways to be involved in all major community events with an exhibit to sell
    memberships and to showcase products, education, etc.
    Join the Chamber of Commerce and Historic Stoughton Downtown Business
    Association and participate.
    Forge alliances with downtown businesses to mutually drive business to the
    area.
        o Create a coupon exchange with other businesses, i.e., All Through the
           House hands out a coupon to use at YRGC and vice versa.



                                  Page 23 of 28
      Create a relationship with Stoughton Hospital to be part of their events and
      activities.
      Speak at civic organizations to educate and answer questions.
      Meet with individual community leaders to educate and answer questions.
      Continue to educate members and community about cooperative values.
      Offer educational seminars on food safety, cooking classes and other subjects of
      interest to the target markets.
      Sponsor and participate in more community events such as benefit walks, art
      gallery walks, and community tailgate parties.
      Foster partnerships with area organizations such as senior citizens, high
      school/elementary students, and church groups to create educational programs
      specific to those groups.
      Encourage community groups to use space at YRGC for meetings.

Advertising media
      Keep promotional advertisements focused and on target.
      Promote sale items bi-weekly in the Stoughton Courier Hub and the Great Dane
      Shopper if budget allows.
      Use direct mail – such as the bi-monthly membership newsletter or postcards –
      to promote sale items and to educate members about products and the
      cooperative model.
      Continue to use the inexpensive weekly eblasts and web site to promote
      products, specials, and events.
      Collaborate with Willy Street Cooperative and promote YRGC news on its web
      site and in its monthly Reader.
      Use the store windows and sidewalk sandwich board to reach walk-by and drive-
      by customers.

Web site
      Use as the primary education medium, with all relevant facts and information
      needed to understand the benefits and value of YRGC.
      Expand and rethink the pages; add recipes and educational information about
      products.
      Link weekly eblasts to web site.
      Accept online orders, especially for special occasions and holidays (i.e., gift
      baskets of locally-produced items).

Public relations
       Identify story angles and regularly send story ideas to the Stoughton Courier
       Hub, SHS newspaper, Isthmus, Wisconsin State Journal, 77 Square and other
       area media including the Willy Street Cooperative Reader.
       Use business and organization newsletters, when available, to disseminate
       information and offers from the cooperative. These could include Stoughton
       Senior Center, Stoughton Trailers, Fleetguard, Stoughton Hospital, Skaalen
       Home.



                                  Page 24 of 28
                          EXPERTS CONSULTED

Professor Ann Hoyt
Department of Consumer Science
University of Wisconsin-Madison
345A Human Ecology Building, 1300 Linden Drive
Madison, WI 53706
608-262-7390
Email: aahoyt@wisc.edu

Anne Reynolds, Assistant Director
University of Wisconsin Center for Cooperatives
222 Taylor Hall, 427 Lorch Street
Madison, WI 53706
608-263-4775, fax 608-262-3251
Email: atreynol@wisc.edu

Mel Braverman
Cooperative Development Services
131 West Wilson Street, Suite 400
Madison, WI
608-243-3255, fax 608-243-3255
Email: MelBraverman@cdsfood.coop

Anya Firszt, General Manager – 251-6776 x 470; a.firszt@willystreet.coop
Lynn Olson, Cooperative Services Manager – l.olson@willystreet.coop
Brendon Smith, Director of Communications – b.smith@willystreet.coop
Dean Kallas, Merchandising Manager – d.kallas@willystreet.coop
Wynston Estis, Assistant Manager – w.estis@willystreet.coop
Williamson Street Grocery Cooperative
1221 Williamson Street
Madison, WI 53703
608-251-0884, fax 608-251-3121
Web: www.willystreet.coop

Pam Mehnert, General Manager
Outpost Natural Foods
Milwaukee and Wauwatosa, Wisconsin
Email: pam@outpostnaturalfoods.coop

UW School of Business




                                 Page 25 of 28
Mary-Carel Verden
Grote Publishing
2364 Jackson Street, #306
Stoughton, WI 53589
608-877-0766, fax 608-877-0688
Email: grotepub@mailbag.com

Kevin Pomeroy, AICP
Planning Director
1000 Friends of Wisconsin
16 North Carroll Street, Suite 810
Madison WI 53703
608-259-1000 ext. 104, fax 608-259-1621
Web: www.1kfriends.org

Stan Koopmans, Senior Vice President
Evergreen State Bank
Lake Kegonsa Office
3162 County Road B, P.O. Box 427
Stoughton, WI 53589
608-873-2010; direct 608-877-7748
Fax 608-873-0527
Email: skoopmans@evergreenstatebank.com

Eric J. Borchardt
Former Yahara River Grocery Cooperative Marketing Committee Chair
616 Valley View Drive
Stoughton, WI 53589
608-877-0416, 608-577-8501
Email: ebork@charter.net

Norma J. Sampson
Yahara River Grocery Cooperative Marketing Committee Chair
Wisconsin Department of Commerce
Safety and Buildings Division Communications
1437 Highway W
Stoughton, WI 53589
608-873-3288, 608-215-3030
Email: nsampson@hughes.net

Stephen Lawrence
Suby, Von Haden & Associates, S.C.
Business Advisory Services
608-826-2729
Email: lawrences@sva.com



                                 Page 26 of 28
                     2008 BOARD OF DIRECTORS
                   Yahara River Grocery Cooperative

President
Myra Hajny is Manager of Operations for the National Conference of Bar Examiners in
Madison. Before joining the staff at the National Conference in January 1998, she
worked for the State of Wisconsin for 23 years, ending her career there as Deputy
Director for the Wisconsin Board of Bar Examiners

Myra graduated from Stoughton High School, attended the University of Wisconsin-
LaCrosse, married a high school classmate, and raised four children in Stoughton. She
is a member of the Friends of the Stoughton Public Library and Stoughton Village
Players and served as an Alderperson for the 2nd Ward in Stoughton from 1996 to
1999. Before being elected YRGC’s president in January 2008, Myra served as the
cooperative’s first secretary starting in September 2006.


Vice President
Norma Sampson has served as the YRGC’s Board vice president since 2007 and also
chairs the Marketing Committee. She brings 40-plus years of marketing
communications experience to the co-op that ranges from newspaper editor to creative
director of an international advertising agency. Currently, she is communications officer
with the Safety and Buildings Division of the Department of Commerce, and has nearly
a decade of social marketing to offer having worked for the states of Idaho and
Wisconsin. Norma has assisted with the development of marketing materials including
YRGC’s logo, web site, newsletter, advertising, surveys, member applications, and
other promotional materials.


Treasurer
Warren Kmiec moved to Stoughton in 2004 from Madison. He has served as Board
treasurer since September 2006 and also chairs the Finance Committee. He was
instrumental in acquiring Dane County CDBG Funds. Warren works for UW-Health in
Madison where he has been a data entry person in the Patient Business Office for the
past 8 years. His experience with computerized bookkeeping and previous
administrative work in non-profit agencies has been a major assistance to the
cooperative. Warren believes accountability to all members is important and is
committed to a close stewardship of the cooperative's financial activity




                                   Page 27 of 28
Secretary
Deb Piper has lived in Stoughton since 1999. She is an 18-year veteran of public
broadcasting and is currently a producer/director for Wisconsin Public Television. Deb
attended a public meeting about the co-op in November 2006, joined the Marketing
Committee and was elected secretary of the board in January of 2008. She works with
Norma Sampson to create the weekly email updates and member newsletters,
manages the e-mail database, volunteers at the store each week and has been very
involved in fundraising drives such as the Chili Cook-off and the upcoming Dickens of a
Walk/Run.


Member at Large
Marlene Widra has been a part of the YRGC movement from the first meeting and has
attended every Board meeting. She was elected member at large in 2008. She
volunteers at the co-op and helps plan and coordinate outreach and educational events.

Marlene chaired the Site Committee and currently serves on the Fundraising and
Marketing Committees. Marlene believes in building community downtown. Her
initiatives include the YRGC's monthly hootenannies, the chili cook-off, participation in
downtown trick-or-treating and Halloween window painting, the Christmas window
display, the mural painted by young people at the Youth Center, and the quilt on loan
from senior YRGC members. She also served as the city contact in securing the 10-
minute temporary parking spot in front of the co-op.




                                   Page 28 of 28

								
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