Business Problem Solution

Topics: Sampling, Statistical hypothesis testing, Sample size Pages: 9 (2438 words) Published: April 27, 2008
Business Problem Paper
In this paper, Team B will be analyzing a fictitious company. The company will be called Jungle Smoothies and its main function is to produce and sell fruit smoothies to the public. Problem
Jungle Smoothies has been the leader in the smoothies industry for many years. It has several franchised locations in 10 different states and all have similar financial performances. Their top competitors are Jamba Juice and Tropical Smoothies. In recent months, Jungle Smoothies has been experiencing a decline in their profits. As member of the New Product development committee, an assignment was delivered to investigate the original problem that lead to the decrease in profits. The committee performed several interviews with current customers. In additions to the interviews, the committee also conducted visits to nearby competitors. Currently, Jungle Smoothie’s menu consists of six smoothies in the following categories: Supercharges smoothies, splendid dessert smoothies, splendid smoothies, Dessert smoothies, Power smoothies, and Low-Fat smoothies. From the competitor’s information gathered by the committee, the menu was very similar with the exception if a new product that was common in several of the competitor’s menu. The new product consisted of an organic smoothie. From the customer interview, a high number of current customer responded that they would choose an organic smoothies if offered over the other six types of smoothies. It seems that organic products have become an important part of people’s daily diet. Defining the variables

In this paper, the two variables the committee will be focusing on are the introduction of the organic smoothie product and the number of customers. The new organic smoothie product will be labeled as the dependent variable and the increase in customers the independent variable. Hypothesis

The null hypothesis tested in this paper is: The introduction of a new organic smoothie will have no affect in the profit and the number of Jungle Smoothie’s customers. The alternative hypothesis tested is: The introduction of a new organic smoothie will lead to higher profits by increasing the number of Jungle Smoothies customers.

When the observation was conducted of Jungle Smoothies competitors, it was discovered that the majority of them had launched the organic smoothie products several months ago and had a strong positive response towards the new product. From the competitors visited, 90% of them showed and increase in their reported revenues and 70% showed that they had an increase in profits. They all sell similar smoothies except for the organic smoothie recently introduced. From this information, the committee decided to conduct an analysis to test if the lack of an organic smoothie product in Jungle Smoothies menu, lead to the decline in profits and a decrease in number of customers.

To better understand the organic product market, the New Product Development Committee (NPDC) conducted a research. The research found that consumer demand is growing in the organic beverages, or drinks, sector. According to, organic product sales in the U.S. are expected to reach $20 billion in 2007 and about 2/3 of consumers say that they have tried organic foods. “Interest in organic drinks is no doubt fueled by consumer demand for natural drinks without artificial flavoring, preservatives, and phosphoric acid, which is linked with bone loss (” Nowadays consumers are concerned about the chemicals, pesticides residues, high in sugar, and lack in nutrition drinks, which has leads to organic drinks as the next logical step. This is truer today, as more health conscious consumers purchase organic drinks for their children in order to avoid those harmful ingredients mentioned earlier. At grocery stores, it common to find a wide range of organic products, from organic baby food to organic cosmetics. It seems that organic products are the...
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