Case Study
Easy Lunchboxes: How Should an Entrepreneur Use Social Media to Market Her Home-Based Business that Sells Lunch Boxes?
Kelly Lester is a wife, mother to three daughters, and entrepreneur. Lester started her first company, a business that sold decorative light switch covers, in 1996 when the Web was in its infancy. Even then, Lester saw the power and the marketing potential that the Web provided businesses, particularly small businesses that lack the massive marketing budgets that their larger rivals have. In addition to selling switch plates through retail shops and museum gift stores, she built a Web site and began, selling online. In those days, competition in e-commerce was slim; when users typed the phrase “switch plate” into a search engine, Lester’s Web site was listed first, a benefit that generated significant online sales for her company.
Lester sold the business and in 2009, with growing daughters, she was inspired to start a second company. “I’m sad when I see what a lot of kids bring to school for lunch,” she says. “I’m even sadder when i see what school districts offer our kids for ‘school lunch. All three of her daughters were in school, and Lester always packed healthy lunches for them but found herself spending too much time preparing and packing lunches. “I’m very concerned about my family’s health and nutrition, but as a busy mom, I like to spend as little time as possible in the kitchen,” says Lester. “I’m all about fresh, healthy, and fast.”
She soon found that washing, filling, and packing nine separate containers (three for each girl) with food every weekday was driving her “absolutely insane.” She began searching store shelves for lunchboxes that made organizing easy but found nothing. Web searches proved no more fruitful. “That’s why I created the Easy Lunchboxes System,” she says.
She began calling plastics manufacturers in the United States, none of whom showed much interest in her idea. Finally, one manufacturer told her that his company could produce a single lid bento-style (with compartments) plastic lunchbox, but He would first have to create a mold, which would cost $75,000.
Lester formed a company, Easy Lunchboxes and began contacting plastic manufacturers in China. There she found a company that would produce the lunchbox she had designed for far less than any of the domestic companies could. “I’m a thrifty shopper,” she explains. Transactions with the foreign supplier did not always go smoothly, however. Lester had to send one of the first shipments back three times because of quality issues and failure to meet the Food and Drug Administration’s standards.
Today, Lester has an independent company test samples of every shipment to make sure they meet all safety standards. The polypropylene plastic used to manufacture the Easy Lunchboxes are BPA free, and the cooler bags that keep items in the lunchboxes cold are tested for lead. Because of the time required to ship products from China and unpredictable interruptions in the supply chain. Lester has learned to keep a large inventory of Easy Lunchboxes in a warehouse in the United States. On one occasion, the company that manufactures the lunchboxes was closed for three months. “They just shut the power grid off,” says Lester. No one knew when the power would come back on so that the factory could get finish her order. “It was very stressful,” she says.
Lester decided to use the Web as the primary marketing tool for her company. When Lester launched the Web site for Easy Lunchboxes, she quickly discovered that the world of e-commerce had changed dramatically. Her company’s Web site did not appear near the top of any of the major search engines. If you ‘re not on page one of search engines, you don’t exist. Lester, who bills herself as “Mom and CEO” on the site, is determined to generate “buzz” for her company and believes that social media is one of the best tools for accomplishing that. Her primary target customer is a busy mom with children who are in school. She also wants to build a recognizable brand for Easy Lunchboxes. The question in her mind is “How do I go about doing that?”
Answer the following questions (Case Study)
QUESTION 01 – 75 Marks (1000 words)
Develop a social media marketing plan for Easy Lunchboxes. One which social media should Lester focuses her efforts? Why? What specific tactics should she employ in each one of the social media that you recommend?
QUESTION 02– 12.5 MARKS
Easy launch box has the following balance sheet. How much working capital does the firm have?
Cash $ 100 Accounts payable $ 200
Accounts receivable 650 Accruals 350
Inventory 550 Notes payable 350
Current assets $1,300 Current liabilities $ 900
Net fixed assets 1,000 Long-term debt 600
Common equity 300
Retained earnings 500
Total assets $2,300 Total liab. & equity $2,300
QUESTION 03– 12.5 MARKS
Easy lunchbox recently reported $20.50 million of sales, $12.60 million of operating costs other than depreciation, and $3-00 million of depreciation. It had $8.50 million of bonds outstanding that carry a 7.0% interest rate, and its income tax rate was 40%. What was Easy lunchbox operating income, or EBIT, in millions?