The Boulder Stop Marketing Plan — Sample Plan
Transcription
The Boulder Stop Marketing Plan — Sample Plan
Sa m ple The Boulder Stop Marketing Plan — Sample Plan Direct Mail - Direct Web Sales - Retail Sales Pla nP ro This sample business plan was created using Marketing Plan Pro® —marketing planning software published by Palo Alto Software. This plan may be edited using Marketing Plan Pro and is one of 70+ sample plans available from within the software. To learn more about Marketing Plan Pro and other planning products for small and medium sized businesses, visit us at www.paloalto.com. ———————————————————————————————————————— This is a sample marketing plan and the names, locations and numbers may have been changed, and substantial portions of the original plan text may have been omitted to preserve confidentiality and proprietary information. M ar ke tin g You are welcome to use this plan as a starting point to create your own, but you do not have permission to reproduce, publish, distribute or even copy this plan as it exists here. Requests for reprints, academic use, and other dissemination of this sample plan should be emailed to the marketing department of Palo Alto Software at [email protected]. For product information visit our Website: www.paloalto.com or call: 1-800-229-7526. Copyright © Palo Alto Software, Inc., 1995-2006. All rights reserved. Sa m ple Confidentiality Agreement The undersigned reader acknowledges that the information provided by ________________ in this marketing plan is confidential; therefore, reader agrees not disclose it without the express written permission of ________________. It is acknowledged by reader that information to be furnished in this marketing plan is in all respects confidential in nature, other than information which is in the public domain through other means and that any disclosure or use of same by reader, may cause serious harm or damage to ________________. Pla nP ro Upon request, this document is to be immediately returned to ________________. ____________________Signature _____________________Name (typed or printed) _______________Date M ar ke tin g This is a marketing plan. It does not imply an offering of securities. Sa m ple Table of Contents Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2.0 Situation Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Market Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.1 Market Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.2 Market Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.3 Market Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.4 Market Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 SWOT Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2.1 Strengths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2.2 Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2.3 Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2.4 Threats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 Product Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6 Critical Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7 Historical Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8 Macroenvironment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 3 3 4 4 5 6 6 7 7 8 9 9 9 10 10 3.0 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Marketing Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Financial Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 Target Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 Positioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6 Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7 Marketing Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7.1 Product Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7.2 Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7.3 Promotion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7.4 Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8 Marketing Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 11 11 12 12 12 12 13 13 14 14 14 15 M ar ke tin g Pla nP ro 1.0 4.0 Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.1 Sales Breakdown - Mail and Web Direct Sa . . . . . . . . . . . . . . . . . . . . . . 4.2.2 Sales Breakdown - Retail Store Sales . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Expense Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 Contribution Margins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 15 16 18 18 18 19 5.0 Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Marketing Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 Contingency Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 21 22 22 1.0 Executive Summary Sa m ple Boulder Stop -- Sample Plan This marketing plan is designed to give us a blueprint for marketing our new retail store, The Boulder Stop. We have included a complete market analysis, target market summaries, a SWOT analysis, a detailed milestones table, and other relevant discussions. Our ambitions for this marketing plan include: Using our existing Internet and direct-mail marketing expertise to build local promotions and marketing literature. • Devising lucrative promotions that will draw sponsorships from possible strategic partners. These promotions are key to our strategy of increasing our strategic alliances through cross-promotions. • Identifying our strengths, weaknesses, opportunities, and threats. • Identifying the local market forces, target markets, and promotional opportunities. Pla nP ro • We hope this marketing plan creates a long-term growth model for our retail success. The Boulder Stop has been successful at direct mail and Internet sales, and we hope to make a smooth transition into retail. 2.0 Situation Analysis The Bend/Redmond area is growing faster than any other Oregon metropolitan area. This growth is fueled by the purchase of 2nd homes, from home-buyers nationwide and retirees, or those searching for an idyllic America. In addition, many people in Western Oregon make the two to three-hour drive from Portland, Oregon's largest city, or Eugene, site of the University and Oregon's and the state's second largest city, to escape the Spring, Fall, and Winter cloud cover and rainfall. We count all tourists and locals as potential customers, since we offer coffee and ice cream, as well as climbing gear and events. M ar ke tin g Many locals in Redmond believe that growth, for the sake of growth, is a political disease. They are right. We must make sure our physical and sociological impact is kept to a minimum, and that locals maintain the quality way of life they deserve. Our local competition is not as fierce as our direct mail and Web competition. They currently do very little marketing and very few company-sponsored events. We won't rule out the possibility that they may do so in the future as a response to our projected success in such marketing. The competition for coffee is an issue, yet we aren't directly competing with the downtown Starbucks(tm), since we don't cater to the urbane culture, but rather the natural explorers, those who would rather go to a state park than city shops. Copyright © Palo Alto Software, Inc. 2004 All rights reserved. www.paloalto.com Not for reproduction, publication, or distribution. Pg 1 2.1 Market Summary Sa m ple Boulder Stop -- Sample Plan In a 1997 state-generated report, consumer expenditures for espresso beverages and rock climbing equipment combined rose to $4,000,000 in Central Oregon. We expect sales to increase steadily as Oregon's population grows and the rock climbing industry becomes increasingly popular. The proximity of several large cities in Western Oregon helps fuel our business, as does the status of Smith Rock as an international destination for rock climbing enthusiasts. Individuals from as far away as Japan, Europe, South America, and Australia travel to Smith Rock to 'recreate'. • Direct Mail and Web Market • Pla nP ro Our direct sales are fueled by our current list of customers and Web co-marketing. To date, we have allocated minimal funds to marketing over the Web. We have relied on word of mouth, free banner exchange programs, our printed catalogs, and Web reviews to drive revenues to the site. We count worldwide readers of such publications as Rock & Ice magazine and Outdoor Adventure among our target direct audience. Retail Market Our three main target markets are weekend warriors, hard core climbers, and the curious. We predict that the number of hard core climbers will grow faster than the number of weekend warriors. Climbing is becoming more and more technical, an "insider's sport", and we believe this will fuel the growth of dedicated, highly sophisticated climbers. At the same time, amateur growth is leveling off. This market analysis is conservative when compared with Oregon's predicted population growth of 2% per year and Bend's 5% average gains over the last five years. M ar ke tin g Target Markets Weekend warriors The curious Hardcore climbers Direct customers Other Copyright © Palo Alto Software, Inc. 2004 All rights reserved. www.paloalto.com Not for reproduction, publication, or distribution. Pg 2 2.1.1 Market Demographics Direct Mail and Web Market Geography: Age: Sex: 80% U.S. customers. 15% European customers. 5% Other countries 18-34 75% male 25% female Geography: Age: Sex: Pla nP ro Retail Market Sa m ple Boulder Stop -- Sample Plan 90% U.S. customers 9% European customers 1% Other countries 15-45 62% male 28% female Males buy gear through catalogs and the Web more often than women. This skews the direct sales toward male customers. In-store customers tend to be younger than catalog shoppers, and a larger % of them are locals or native to the United States. Table: Market Analysis Growth 25% 25% 30% 35% 0% 30.70% M ar ke tin g Market Analysis Potential Customers Weekend warriors The curious Hardcore climbers Direct customers Other Total 1999 40,000 30,000 15,000 85,000 0 170,000 2000 50,000 37,500 19,500 114,750 0 221,750 2001 62,500 46,875 25,350 154,913 0 289,638 2002 78,125 58,594 32,955 209,133 0 378,807 2003 97,656 73,243 42,842 282,330 0 496,071 CAGR 25.00% 25.00% 30.00% 35.00% 0.00% 30.70% 2.1.2 Market Needs There are two important underlying both. The Boulder Stop's function is slopes; selling important gear while the rock climber's version of the ski 1. 2. 3. needs, and the combination of gear and coffee serves similar to that of the ski lodge at the bottom of the providing a place for snacks, beverages, and talk. We're lodge. There is a real need for a highly professional provider of climbing gear near the Smith Rock location. People forget to pack exactly what they need, and things break. There is a practical need for coffee, a meeting place, and conversation. This is part of the activity focus of the location. There is a need for 'one-stop' shopping. Climbers, and recreationalists don't want to have to buy their gear at one store, and drive miles to enjoy good coffee and conversation at another. The Boulder Stop fulfills this need. Copyright © Palo Alto Software, Inc. 2004 All rights reserved. www.paloalto.com Not for reproduction, publication, or distribution. Pg 3 Sa m ple Boulder Stop -- Sample Plan 2.1.3 Market Trends Trends are in our favor. We have three major trends that help us: The sport of rock climbing is enjoying growth. The success of rock climbing gyms in the Silicon Valley, Seattle, Eugene, and other locations offer clear evidence of this growth. • Central Oregon is booming as a vacation destination and recreation spot. Oregon in general is enjoying the growth of interest from Californians, Washingtonians, and former urban dwellers searching for small, friendly communities. • Gourmet coffee demand is very strong throughout the Northwest. Growing numbers look to their expensive espresso drink as a way to enjoy a moment, and as a natural part of an outing or activity. Pla nP ro • Market Forecast 300,000 250,000 200,000 150,000 100,000 Weekend warriors The curious Hardcore climbers Direct customers Other M ar ke tin g 50,000 0 1999 2000 2001 2002 2003 2.1.4 Market Growth • According to [the latest available studies], spending on vacations in Oregon will grow at better than 25% per year. • Spending on climbing has grown faster than skiing or mountain biking, although from a much smaller base, according to [the latest available studies]. They estimate 30% growth in climbing-related sales for the next three years. • Spending on coffee is up 15% this year, according to the [omitted] annual report. We expect coffee and espresso beverage sales to level out in 1999-2000. Copyright © Palo Alto Software, Inc. 2004 All rights reserved. www.paloalto.com Not for reproduction, publication, or distribution. Pg 4 Sa m ple Boulder Stop -- Sample Plan Target Market Growth 40.00% 30.00% 20.00% 10.00% 2.2 SWOT Analysis Pla nP ro 0.00% The Boulder Stop recognizes the following strengths, weaknesses, opportunities, and threats (SWOT): Strengths: Community commitment Experience in the sport of rock climbing. Nationwide marketing experience. M ar ke tin g • • • Weaknesses: • • • Limited cash. Limited experience dealing with contractors/builders. Little experience with local politics. Opportunities: • No well-focused, well-marketed competition. • The cost of Internet and other direct marketing opportunities have decreased in recent years. • Climbers and hikers are not as price-sensitive as other outdoor enthusiasts. Threats: • • Locals are very sensitive to land use. La Nina weather. Copyright © Palo Alto Software, Inc. 2004 All rights reserved. www.paloalto.com Not for reproduction, publication, or distribution. Pg 5 Sa m ple Boulder Stop -- Sample Plan 2.2.1 Strengths Our most significant strength lies in our management team's skills in both rock climbing and running a small business. After years of working the pro circuit, Bill Walsh has gained insight into the history, ethics, and progressive nature of traditional wall and sport climbing. Pan Silverton has worked a number of years with small business clients looking for direction and strategic cohesion. His insight has led to multi-million dollar finance deals that helped put some $100K-500K a year businesses on the map. The combination of experience and proven business acumen represent a strength for The Boulder Stop. Pla nP ro With a nationwide direct marketing business that includes Internet and catalog sales of more than $50,000 per year, The Boulder Stop is in a natural position to expand into retail. Gateway Computer started as a small start-up direct assembly business in North Dakota and is now opening "Gateway Country" stores across America. Although The Boulder Stop is taking a more conservative approach, the company also enjoys strong brand recognition. The natural 'next-step' is to expand into retail, into Redmond, OR. During it's 10 years of operation in Eugene, The Boulder Stop has contributed over $13,000 toward community events and involvement. We have hosted "Boulder Green" for three years. A state wide bowling tournament, "Boulder Green" is about giving bowling balls and free bowling passes to the less fortunate in our community. We view this as one more win in the fight against badminton We are comfortable that our community involvement will only strengthen our business in Redmond, as it has in Eugene. 2.2.2 Weaknesses The Boulder Stop has access to a limited amount of cash. Initial financing will not be difficult due to solid credit and the low inventory depreciation rate, but ongoing financing will be more difficult to obtain. It's not the receivable days that will wreak havoc on the cash plan, since sales are 100% cash, it is the operating and marketing expenses. M ar ke tin g Nobody at the Boulder Stop has experience in negotiating with contractors. This is a liability due to the difficulty in managing and maintaining the timeliness and budget for a contractor. We will compensate for this weakness by retaining an expert contractual lawyer, Frank Nussheim, to negotiate our side of the construction contract. Our lawyer will handle all building commitments and authorize the disbursement of funds for such activities. Although management at The Boulder Stop understands many of the concerns of local citizens in Redmond, we have few opportunities to express our vision through a useful venue. Eastern Oregon can be very 'status quo' and any new player threatens the old order and puts the locals on the defensive. Instead of proclaiming our innocence and placing the blame on a few radicals, we will pull the community together through free barbecues that include children's' games such as gunny sack races. We're also sponsoring the "Run For Their Lives" event which will raise money for children from broken and violent homes, donating medical care and clothing. Copyright © Palo Alto Software, Inc. 2004 All rights reserved. www.paloalto.com Not for reproduction, publication, or distribution. Pg 6 Sa m ple Boulder Stop -- Sample Plan 2.2.3 Opportunities The market for rock climbing and hiking gear, good coffee, and ice cream in Redmond is far below saturation level. Our two local competitors do very little in the way of marketing, be it advertising or community involvement PR. This gives us the opportunity to develop the market and brand ourselves as the market 'original'. The cost of selling via e-commerce and through mail-order has decreased tremendously in recent years. Internet domain names (www.yourname.com) cost $35 a year, and ecommerce servers may be set up for only $30 a month. Certain high-circulation catalogs will develop custom catalogs for vendors and mail them for a fixed fee. This is incredibly cost effective for companies that don't have costly relationships with printers, graphic artists, and the like. Both direct mail and Internet sales are a growing segment of our business. Pla nP ro Weekend warriors and hard core climbers will pay anything to get into the latest gear. The average climber carries around $1,200 of equipment. Since climbers place their lives on the line when they use their equipment, the majority of them buy only name brand gear at a price premium. Climbers associate high price with premium quality. Hikers are similar, but to a lesser degree. Hikers look for gear that looks great and feels comfortable. Our typical curious customer is lodging in Sunriver (20 miles), hiking at Smith Rock, Newberry Crater, and lakeside trails in the mountains. They own a new VW, SUV, or 4WD station wagon, are married, have a stable job, and are responsibly putting enough in savings to retire early. In other words, they don't care what they pay for hiking gear, as long as it's not insulting. We categorize insulting as 110% or more above REI (Recreational Equipment Incorporated) prices. Rock climbing service companies offer us a unique opportunity. We can team up with these services to promote our events and store, and in return we will give them 'shelf-space'. This gives service companies cost-effective market exposure. We will partner with companies such as First Ascent LLC and other American Mountain Guides Association (AMGA) accreditees. M ar ke tin g 2.2.4 Threats Locals are sensitive to the manner in which we develop our land for commercial use. The land is state owned. Oregon will lease one, 1/4 acre parcel to The Boulder Stop. Since it is public land, the public can revoke our lease without offering just cause. The last three years have been 'La Nina' years, pummeling Oregon with rain and cold weather. Last year, the rock climbing season began in May. When the season begins as late as May, it means we have two to three fewer months of revenue with which to pay for our leased land and equipment (fixed costs). Although we can hope for an Indian summer, this doesn't happen very often in Oregon. By early October, the vacation season is over, kids are back in school, and there are few people around to buy our coffee, gear, etc. Copyright © Palo Alto Software, Inc. 2004 All rights reserved. www.paloalto.com Not for reproduction, publication, or distribution. Pg 7 Sa m ple Boulder Stop -- Sample Plan 2.3 Competition Direct Mail and Web Sales: • REI (REI.com) and L.L. Bean (L.L. Bean.com) sell climbing gear to our target market. They are large corporate entities, each with powerful online and retail presence. Fortunately, they have not opened any retail stores in the Bend/Redmond area, so we count them solely as direct mail and Web competitors. We hope to achieve .5-1% of their gross yearly direct sales. Retail Sales: Pla nP ro • [UnNamed#1] will be our toughest competitor, for they have already established themselves in the rock climbing community. They have a very experienced and knowledgeable staff of expert climbers, and they are located on the highway that leads directly to Smith Rock. They carry 75-80% of the same gear that we sell. • [UnNamed#2] sells limited gear (clothes), they do not promote, and they do not market their products extensively. On the other hand, they sell ice cream and carry more GenX apparel than The Boulder Stop. Their biggest weakness is small store size. Competitor by Growth and Share 20% 15% 10% 5% UnNamed#1 UnNamed#2 REI M ar ke tin g 0% Other -5% -20 0 20 40 60 80 100 120 Table: Growth and Share Analysis Growth and Share Competitor UnNamed#1 UnNamed#2 REI Other Average Total Price $50 $35 $300 $0 Growth Rate 10% 3% 15% 0% Market Share 45% 15% 35% 0% $96.25 $385.00 7.00% 28.00% 23.75% 95.00% Copyright © Palo Alto Software, Inc. 2004 All rights reserved. www.paloalto.com Not for reproduction, publication, or distribution. Pg 8 Sa m ple Boulder Stop -- Sample Plan 2.4 Product Offering Espresso is the big money maker for The Boulder Stop, with coffee peripherals coming in a close second. Straight espresso bean re buys arrive on Mondays and Thursdays, ensuring the freshest beans possible. Modified re buys begin on the first of each month. Bill Walsh will oversee all purchases, shipments, and deliveries. 2.5 Keys to Success Pla nP ro The Boulder Stop sells high-quality rock climbing gear to serious climbers. Rock climbing gear is a long-term sales project that will rely on future catalog and "word-of-mouth" sales. The gear is checked by knowledgeable employees who use and recommend equipment to customers and management. The gear is purchased from well-known manufacturers like Metolius Mountain Products, Black Diamond, Boreal, and Petzl. Management will rely on employees and customers to shorten the feedback loop in product and service offerings. Climbing gear is delivered every Thursday via UPS. To succeed in this business we must: • • • M ar ke tin g • Sell products that are of the highest reliability and quality. We must offer as many or more high-end products than REI offers online and through their Eugene and Portland stores. This means we must carry all high-end brands of harnesses, active protection, passive protection, helmets, ice climbing gear, camping gear and mountaineering gear. We will offer loss leaders and other promotions that bring customers into the store, to buy goods and to generate awareness of promotional events. Provide for the satisfaction of 100% of our customers. Our customers are very valuable to us, and we will design a customer care plan to manage complaints, implement employee and customer feedback, manage supplier accounts, and predict future conflicts. To partner with the appropriate service companies in order to supply our customers with all the climbing products and services they need. Establish long-term relationships with great distributors such as Trago, Petzl, Black Diamond, Beal, Metolius Mountain Products, and others. • 2.6 Critical Issues As we expand into retail, our success will depend on whether we will be able to maintain our existing direct business. The retail model offers a more mature market than the direct model and exposes us to fewer outside threats. In our direct business sales, we compete against big players such as REI and LL Bean, among others. Our retail model competes against two small, under-marketed gear stores that don't offer great espresso or a convenient locale. The integration of retail and direct sales strategies will help The Boulder Stop build business sales in both categories. It's critical that we view the 'big picture' when allocating resources to marketing tactics. For instance, we will both gain allies and increase sales by discounting Eastern Oregon vacations to our existing and potential direct customers. Our allies will offer co-marketing discounts, and we will use their venues to advertise our rock climbing classes, gear selection, and espresso beverages. The most important issue is this: We must stay the course and build the business Copyright © Palo Alto Software, Inc. 2004 All rights reserved. www.paloalto.com Not for reproduction, publication, or distribution. Pg 9 Boulder Stop -- Sample Plan Sa m ple conservatively and spend accordingly. Projects must be kept on budget and on time, marketing programs must be cost efficient and backed by solid data gathering and a high potential for success, measured or otherwise. 2.7 Historical Results Our marketing strategies have always revolved around direct Internet and mail sales. We have done little tele-sales, as that does not fit into our business practices model. To date, our direct sales model has been successful in (1) keeping costs down, (2) giving us great ROI, (3) building a business from nothing to $150,000 a year, and (4) restraining our growth to match our level of financing. Pla nP ro As we expand into a new market and grow with a new business model, we will need to put our direct mail sales experience to work. We will need to be just as aggressive about getting our message out to the locals. Our direct mail sales experience will help us determine which direct market tactics and programs work, and which ones don't. From flyers to magazine and newspaper ads, we will use our connections and resources gathered through national direct sales to focus our retail marketing on one region. In addition, our Website and Website sales will be of much use to us. We will synch Website sales orders with in-house ordering systems, to ensure that customers may buy over the Web and pick up merchandise in the store if they wish, free of shipping charges. By adopting this marketing program, we will gain from historical experience, while adapting to our retail direct business model. M ar ke tin g Things have changed tremendously in the direct catalog (mail) and especially the Internet sales category. Major players such as REI and L.L. Bean now rely on Web sales to boost catalog sales. Both companies put out the same number of catalogs, but use the Web for product real-time pricing, order tracking, and customer feedback. Since 1995, Web business has grown by 3,000%. Direct market growth, and our sales stability in the direct market, give us the power to leverage our direct sales to build non-Internet retail sales. 2.8 Macroenvironment Rock climbing The rock climbing industry is growing faster than ever. Although the gear is expensive, people buy it because it provides them with long-term fun. Coffee and Espresso High profit margins on coffee sales and low overhead costs lead to high profit margins in the espresso industry. Expansion of coffee and espresso retail outlets has increased exponentially in the last five years as large companies such as Starbucks[tm] have increased their reach to the East Coast in cities such as Boston, New York, and Washington D.C. Copyright © Palo Alto Software, Inc. 2004 All rights reserved. www.paloalto.com Not for reproduction, publication, or distribution. Pg 10 Sa m ple Boulder Stop -- Sample Plan 3.0 Marketing Strategy • We will build strategic partnerships with climbing service companies. • We will differentiate The Boulder Stop from competitors through aggressive advertising and promotional campaigns that demonstrate our community support and commitment. • We will build retail store awareness through our direct mail and Web campaigns, leading to greater word-of-mouth marketing. 3.1 Mission Pla nP ro The Boulder Stop is an equipment store specializing in rock climbing gear and coffee/espresso drinks. Our mission is to provide an entertaining, fun, and knowledgeable atmosphere to climbers who experience nothing but a rock face and nutrition bars all day. Rock climbing is as much about storytelling and nostalgia as it is about routes and gear. The Boulder Stop adds value by creating a 'campfire' social setting in a retail location. We take care of our employees; that is, we pay them well and give them a share of profits. We respect all customers who respect our store and people, and show respectful diligence toward those who choose not show our people respect. We work as a team, not as a socialist Mecca. Our people are paid according to their skills and abilities. In addition, each employee will have the option of company-sponsored training courses and outside curricula that build on their skill sets. Our customers are our most important asset, and we rely on them for feedback. We do not, however, send out unsolicited surveys to unsuspecting customers. We will accept in-store suggestions and test them for results. M ar ke tin g We have a plan and our goals are clear: To create a fun, entertaining, and respectful retail environment that generates sales of espresso and climbing gear. 3.2 Marketing Objectives 1. 2. 3. To make The Boulder Stop the number one destination for rock climbing equipment customers in Oregon, and to achieve the largest market share in the region for rock climbing gear. There are no resources for gauging market share for our local market, but the State of Oregon provides yearly economic data by region. We will use this data to compile an estimate of market share goals for 1998. To be an active and vocal member of the community, and to provide continual reinvestment through participation in community activities and financial contributions. We will sponsor two to three events during the year, including the Pacific Amateur (PA) Golf Classic, charity events, and celebrity-hosted competitions. To achieve 30% market share by August of 2000. Copyright © Palo Alto Software, Inc. 2004 All rights reserved. www.paloalto.com Not for reproduction, publication, or distribution. Pg 11 3.3 Financial Objectives Our financial objectives are as follows: • • • • To To To To Sa m ple Boulder Stop -- Sample Plan always maintain a minimum cash balance of $10,000. maintain year-end minimum contribution margins of 40%. grow direct retail sales by a conservative minimum of 12% per year. achieve sales of $190,000 in year one. 3.4 Target Markets Pla nP ro We will focus on the highly discriminating, hard-core climber segment first, because these are the opinion leaders. Both the weekend warrior and the curious will follow the hard-core climbers. If we can attract and keep the hard-core climbers, then they will become part of the attraction for the others. To attract them, we will carry all the best high-tech gear, know the jargon, use the latest technology, and become a "Futurist" product and services company. We want to clearly differentiate the weekend warriors from the hard-core climbers. Less competitive, or at least at a different competitive level, these climbers are usually at Smith for fun. They respect the hard-core climbers and want to be like them, but don't want to be classified as having "rock on the brain." Approximately 20-30% of these climbers will respond to family events by bringing their families; the other 70-80% climb with friends and occasionally try to outdo each other. This market is highly susceptible to getting stuck in a coffee shop with friends, they will talk about their latest romance, conflict with other friends, the future, or the fine espresso at The Boulder Stop. We will market the weekend warriors with a combination of amateur climbing events and other sponsored activities. 3.5 Positioning M ar ke tin g For climbers who need a place to stop for gear and coffee near Smith Rock, The Boulder Stop offers high quality climbing gear, gourmet espresso drinks, and a comfortable place to meet and talk. We will position The Boulder Stop as a community-involved organization that creates value for the community while minimizing environmental impact. 3.6 Strategies Our main marketing strategy is to focus on the overall experience needed by each customer. Some of our customers will seek a friendly gathering place to discuss climbs and prospects. Others want to shop in a semi-sterile retail environment. Still others don't want to linger at all, but wish to get their 'treat' and enjoy the outdoor weather. Therefore, our strategy is to fulfill these various customer needs while minimizing possible friction between these customers. That is our focus. Copyright © Palo Alto Software, Inc. 2004 All rights reserved. www.paloalto.com Not for reproduction, publication, or distribution. Pg 12 Sa m ple Boulder Stop -- Sample Plan 3.7 Marketing Mix Our marketing mix relies heavily on our promotions. Our unique promotions set us apart from our local competitors, which sponsor few promotions. From the Perry Claw Rock Festival to The Llama races, The Boulder Stop will seek to create high-impact local events that create consumer recall and increase foot traffic. Our prices are competitive, but we do not compete on price. We will not match prices; we will simply perform monthly competitive shopping trips to gauge the average prices for goods. Our store and location give us a competitive advantage. The Boulder Stop is located within 1/4 mile of Smith Rock itself, and within walking distance of the park. 3.7.1 Product Marketing Pla nP ro Our opportunities for differentiating on service are limited. Our part-time staff are experienced rock climbers, and are very knowledgeable about gear and the sport itself. Beyond this expertise, there's no reason for us to create special services when we can comarket climbing schools and services through store flyers and posters. As a reseller of name-brand products, we have very little control over how our customers view each individual product. We do, however, have control over the customer environment and the manner in which we display our products. From a standard retail standpoint, product marketing appears to be very simple - display the products in an aesthetically pleasing manner, and they will come. It is much more complicated for us. We have identified three types of customers, and each group has it's own buying pattern. M ar ke tin g The hard-core climbers need a great selection of gear, and will be disappointed if they aren't offered a 'bargain bin' of last years' model gear. The hard-core gear shoppers will be separated from the curious by a low glass partition. This partition will serve both to absorb the noise of shoppers and eaters, and to separate and maintain the climbers' social order. We will host climber discussion groups, with free coffee on Friday. and Sat. nights after 7:00 p.m. This will give hard-core climbers an opportunity to exchange stories and relax in our cafe, away from their nemesis: 'yuppie tourists'. The weekend warriors won't feel excluded from the gear, and will also partake of the bargain bin. The warriors will find comfort in the cafe area, where they can talk about their pursuits rather than challenge them on the rock face. These people are not in great shape, and are likely to flock to the store as early as 3:00 p.m. for ice cream and cookies. We'll have extra staff on hand during these times. The curious are difficult to gauge. They will flow in and out all day, and are likely to peruse our magazine rack for hours (we've allowed for the magazine write-offs). This customer base is our most lucrative, and is most likely to buy an iced espresso and/or ice cream before or after their short day hikes. Since espresso is a cash cow for us, we'll offer them a solid selection of beverages so nobody's disappointed. Copyright © Palo Alto Software, Inc. 2004 All rights reserved. www.paloalto.com Not for reproduction, publication, or distribution. Pg 13 Sa m ple Boulder Stop -- Sample Plan 3.7.2 Price We are a store that is positioned for impulse buying; therefore, it is important that we maintain a flexible pricing strategy. Our pricing strategy will be based on competitive parity guidelines. We will not exceed competitors' prices by more than 10%. • Price says a lot about a product. The products that are innovative and not available elsewhere in the region will be marked up to meet the demand curve. We are not afraid of premium pricing a premium product. • Espresso beverages will be priced a little below the industry average. Although we will still make money off the beverages, we consider this a "Loss Leader" strategy whereby word-of-mouth advertising brings customers in for the drinks, simply to make them aware of our additional products and services. 3.7.3 Promotion Pla nP ro • The Boulder Stop will implement a strong sales promotion strategy. Advertising will be secondary. • [Omitted] will be paid up to $2,000 to determine the needs of the surrounding population and how the company may best meet those needs with promotions, literature and other marketing programs.. • Promotional campaigns will be partially outsourced to [Omitted]. • Advertising will be consistent with [Omitted]. • Sales promotions and public relation strategies will work together to inform customers of new products, to encourage an image of community involvement for The Boulder Stop, and to limit environmental impact. M ar ke tin g 3.7.4 Service Service is important to our mix. We have an obligation to provide quality products and cheerful service, fast and efficiently. Our service goals are simple and easy to maintain. We will make plain our policy that we do not accept returns or exchanges without receipt and proof of product failure. We are in this to make money, as a business, and cannot afford to give our value to free riders or people with 'buyer's remorse', who choose not to take responsibility for their purchase(s). Copyright © Palo Alto Software, Inc. 2004 All rights reserved. www.paloalto.com Not for reproduction, publication, or distribution. Pg 14 Sa m ple Boulder Stop -- Sample Plan 3.8 Marketing Research We will obtain market research through in-store customer comment cards and the local Chamber of Commerce. 4.0 Financials 4.1 Break-even Analysis Pla nP ro • Sales are expected to grow from $193,000 the first year to $262,000 by year three. • Expenses will increase with the rate of inflation (3%) minus diminishing cost of goods (1%). For our break-even analysis, we have chosen $3 to represent our average revenue per unit. Although revenue from ropes and other gear amount to significantly more revenue per unit, such items skew the revenue curve toward less units sold. We want to engage in a practical analysis of precisely what it will take to turn the company profitable by using the P&L statement. In light of this, the Break-even analysis merely becomes a gauge by which we can measure our monthly revenue streams to predict long-term profitability. According to the analysis, we will break-even at 1,333 units. Break-even Analysis $3,000 M ar ke tin g $2,000 $1,000 $0 ($1,000) ($2,000) ($3,000) 0 444 888 1332 1776 2220 Monthly break-even point Break-even point = where line intersects with 0 Copyright © Palo Alto Software, Inc. 2004 All rights reserved. www.paloalto.com Not for reproduction, publication, or distribution. Pg 15 Table: Break-even Analysis Break-even Analysis: Monthly Units Break-even Monthly Revenue Break-even 1,333 $4,000 Assumptions: Average Per-Unit Revenue Average Per-Unit Variable Cost Estimated Monthly Fixed Cost $3.00 $0.75 $3,000 4.2 Sales Forecast Sa m ple Boulder Stop -- Sample Plan Pla nP ro We will promote to the weekend warriors by hosting fun events like the "Llama Run". Our part-time sales clerks, also trained in the ways of promotional tactics, will call businesses within the Bend area and establish additional sponsors for these events. For in-store sales, our strategy will be to maintain as much on-site POP (point-of-purchase) literature as possible. Our part-time staff will be responsible for informing customers of the products and creating the best fit between customer and product. Our employees do not work on commission. Monthly Sales Forecast $30,000 $25,000 $20,000 M ar ke tin g $15,000 $10,000 $5,000 Carabiners Ropes Books and Magazines Cookies and Cones Espresso Regulars Espresso Shakes Gear Rentals All Other Gear Other $0 May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Copyright © Palo Alto Software, Inc. 2004 All rights reserved. www.paloalto.com Not for reproduction, publication, or distribution. Pg 16 Table: Sales Forecast Sa m ple Boulder Stop -- Sample Plan 2000 3,577 331 181 17,358 23,867 2,387 362 2,172 0 50,234 2001 4,007 370 203 19,441 26,731 2,673 405 2,433 0 56,262 2002 4,488 415 227 21,773 29,938 2,994 454 2,725 0 63,013 2003 5,026 465 254 24,386 33,531 3,353 508 3,052 0 70,575 2004 5,629 520 285 27,313 37,555 3,755 569 3,418 0 79,044 Unit Prices Carabiners Ropes Books and Magazines Cookies and Cones Espresso Regulars Espresso Shakes Gear Rentals All Other Gear Other 2000 $9.13 $141.95 $12.15 $1.01 $1.77 $2.68 $4.05 $20.30 $0.00 2001 $9.50 $147.63 $12.64 $1.05 $1.84 $2.79 $4.21 $21.11 $0.00 2002 $9.88 $153.54 $13.14 $1.10 $1.92 $2.90 $4.38 $21.95 $0.00 2003 $10.27 $159.68 $13.67 $1.14 $1.99 $3.02 $4.56 $22.83 $0.00 2004 $10.68 $166.07 $14.21 $1.18 $2.07 $3.14 $4.74 $23.74 $0.00 2000 $32,669 $46,946 $2,197 $17,574 $42,287 $6,403 $1,464 $44,084 $0 $193,623 2001 $38,052 $54,682 $2,559 $20,470 $49,256 $7,459 $1,706 $51,349 $0 $225,532 2002 $44,323 $63,694 $2,980 $23,843 $57,373 $8,688 $1,987 $59,811 $0 $262,700 2003 $51,628 $74,191 $3,472 $27,773 $66,828 $10,120 $2,314 $69,668 $0 $305,993 2004 $60,136 $86,417 $4,044 $32,350 $77,841 $11,787 $2,696 $81,149 $0 $356,421 2000 $3.54 $55.57 $0.76 $0.10 $0.25 $0.40 $0.25 $12.13 $0.00 2001 $3.64 $57.24 $0.78 $0.10 $0.26 $0.42 $0.26 $12.50 $0.00 2002 $3.75 $58.96 $0.80 $0.11 $0.27 $0.43 $0.27 $12.87 $0.00 2003 $3.87 $60.73 $0.83 $0.11 $0.28 $0.44 $0.28 $13.26 $0.00 2004 $3.98 $62.55 $0.85 $0.11 $0.28 $0.45 $0.28 $13.66 $0.00 2000 $12,658 $18,379 $137 $1,752 $6,022 $964 $91 $26,353 $0 $66,356 2001 $14,603 $21,202 $158 $2,021 $6,947 $1,112 $105 $30,401 $0 $76,549 2002 $16,845 $24,459 $182 $2,331 $8,014 $1,282 $121 $35,071 $0 $88,306 2003 $19,433 $28,215 $210 $2,690 $9,245 $1,479 $140 $40,457 $0 $101,870 2004 $22,418 $32,549 $242 $3,103 $10,665 $1,706 $162 $46,672 $0 $117,518 Sales Carabiners Ropes Books and Magazines Cookies and Cones Espresso Regulars Espresso Shakes Gear Rentals All Other Gear Other Total Sales M ar ke tin g Direct Unit Costs Carabiners Ropes Books and Magazines Cookies and Cones Espresso Regulars Espresso Shakes Gear Rentals All Other Gear Other Pla nP ro Sales Forecast Unit Sales Carabiners Ropes Books and Magazines Cookies and Cones Espresso Regulars Espresso Shakes Gear Rentals All Other Gear Other Total Unit Sales Direct Cost of Sales Carabiners Ropes Books and Magazines Cookies and Cones Espresso Regulars Espresso Shakes Gear Rentals All Other Gear Other Subtotal Direct Cost of Sales Copyright © Palo Alto Software, Inc. 2004 All rights reserved. www.paloalto.com Not for reproduction, publication, or distribution. Pg 17 4.2.1 Sales Breakdown - Mail and Web Direct Sa Sa m ple Boulder Stop -- Sample Plan Our direct sales are seasonal in nature, yet, unlike retail sales, we can maintain small margins throughout the Northern Hemisphere's Fall/Winter months. We will maintain these sales by temporarily discontinuing our direct mail sales in favor of Web sales. Website management costs are between $25-50 a month. Banner advertising on sites such as outside.com, rockandice.com, and others will cost under $1,500 and will help us maintain market exposure during the off season. We will create direct mail catalogs again in April. 4.2.2 Sales Breakdown - Retail Store Sales Pla nP ro Retail store sales will end in November and begin again in April. Retail sales figures rely heavily on espresso and carabiner purchases. The average climber loses one carabiner every trip, and The Boulder Stop will be there to provide them with the best selection of 'biners in the Redmond area. We will price the 'biners competitively, but not too competitively. At an average price of $9 per 'biner, we priced higher than REI, but lower than any of our local competition. M ar ke tin g In-store espresso sales are driven by our marketing promotion machine. As people learn that we are a community-involved, neighborhood organization, we'll gain the trust of locals who will choose to drive five miles to the The Boulder Stop, at scenic Smith Rock, rather than visit the local 'strip malled' ice-cream parlor for a cone. This goes back to our main objective: To become a place where locals and expert climbers can mingle to enjoy good gear, coffee, ice cream, cookies, etc. 4.3 Expense Forecast Our expense forecast relies on a conservative inflation forecast of 4% per year minus a 1% diminishing cost allowance. Copyright © Palo Alto Software, Inc. 2004 All rights reserved. www.paloalto.com Not for reproduction, publication, or distribution. Pg 18 Sa m ple Boulder Stop -- Sample Plan Monthly Expense Budget $12,000 $10,000 $8,000 Advertising/Promotion Sponsored Activities $6,000 Direct Marketing Activities $4,000 $2,000 $0 Pla nP ro Other May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Table: Marketing Expense Budget Marketing Expense Budget Advertising/Promotion Sponsored Activities Direct Marketing Activities Other 2001 $3,000 $9,000 $42,000 $0 -----------$54,000 23.94% $94,984 42.12% 2002 $3,000 $9,000 $42,000 $0 -----------$54,000 20.56% $120,394 45.83% 2003 $3,000 $8,000 $42,000 $0 -----------$53,000 17.32% $151,123 49.39% 2004 $3,000 $7,000 $42,000 $0 -----------$52,000 14.59% $186,903 52.44% M ar ke tin g Total Sales and Marketing Expenses Percent of Sales Contribution Margin Contribution Margin / Sales 2000 $3,000 $11,250 $49,500 $0 -----------$63,750 32.92% $63,517 32.80% 4.4 Contribution Margins May and August will provide us with the lowest contribution margins. May, because we are opening our doors in May, requiring plenty of promotional material, and the supplies necessary for our big Grand Opening celebration. August, because we've scheduled the Perry Claw Rock Festival during August. This event will bring some of the finest local musicians and nationally recognized climbers to Smith Rock for a three-day climbing celebration/contest. The rest of the seasonal year, our contribution margins will average 40% for the first three years. Not great for the industry, but then we are marketing more aggressively than our industry. With our current financial backing and direct sales, we can maintain these 40-50% contribution margins for at least three years, or long enough to gain local recognition and at least 70% market share. Copyright © Palo Alto Software, Inc. 2004 All rights reserved. www.paloalto.com Not for reproduction, publication, or distribution. Pg 19 Sa m ple Boulder Stop -- Sample Plan Contribution Margin Monthly $12,000 $10,000 $8,000 $6,000 $2,000 $0 Pla nP ro $4,000 May Jun Table: Contribution Margin Contribution Margin Sales Direct Costs of Goods Other Variable Costs of Sales Cost of Goods Sold Gross Margin Gross Margin % M ar ke tin g Marketing Expense Budget Advertising/Promotion Sponsored Activities Direct Marketing Activities Other Total Sales and Marketing Expenses Percent of Sales Contribution Margin Contribution Margin / Sales Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2000 $193,623 $66,356 $0 -----------$66,356 $127,267 65.73% 2001 $225,532 $76,549 $0 -----------$76,549 $148,984 66.06% 2002 $262,700 $88,306 $0 -----------$88,306 $174,394 66.39% 2003 $305,993 $101,870 $0 -----------$101,870 $204,123 66.71% 2004 $356,421 $117,518 $0 -----------$117,518 $238,903 67.03% 2000 $3,000 $11,250 $49,500 $0 -----------$63,750 32.92% $63,517 32.80% 2001 $3,000 $9,000 $42,000 $0 -----------$54,000 23.94% $94,984 42.12% 2002 $3,000 $9,000 $42,000 $0 -----------$54,000 20.56% $120,394 45.83% 2003 $3,000 $8,000 $42,000 $0 -----------$53,000 17.32% $151,123 49.39% 2004 $3,000 $7,000 $42,000 $0 -----------$52,000 14.59% $186,903 52.44% 5.0 Controls Our marketing plan is designed around a dynamic internal and external business environment. We will complete this topic as we gain new insight into our market and program effectiveness. Copyright © Palo Alto Software, Inc. 2004 All rights reserved. www.paloalto.com Not for reproduction, publication, or distribution. Pg 20 Sa m ple Boulder Stop -- Sample Plan 5.1 Implementation The first milestone is distribution of a flyer to announce our grand opening celebration. The flyer will appear on telephone poles (where legal), in outdoor stores, and will be mailed to our list of direct-mail customers. Our celebration will consist of an outdoor barbecue, gunny sack races, climber-dunking festivities, and llama racing. Local vendors have been invited to set up booths and participate, subject to prior approval. During the flyer campaign, Pan Silverton will arrange for Yellow Pages print ads and Internet Web banner advertising within the Bend/Redmond area, as well as the Portland area. The Yellow Page ads are purchased through a flat-fee to USWest Dex, and The Yellow Pages company. Banner ads are more complex and require a media kit with a value-added offering to retailers with Internet websites. The pitch will be - help us market ourselves and we will add your company to our online listing of outside resources. Pla nP ro The first annual Llama Run is a special event for the St. Charles Medical Center in Bend. Llamas and their owners will converge on Redmond for races that include 1st, 2nd, and 3rdplace winners. First prize wins $1,000, 2nd wins $750, and 3rd wins $250. The Most Colorful Llama award will be given to one winner at the end of the show, and will include a bag of llama feed and a $100 gift certificate to the Heathman restaurant. The entry fee will be $100 per llama, and all fees will go directly to St. Charles Medical Center. The Perry Claw Rock Festival will bring big-name climbing stars such as Louis Baruqe and Sheri Lassiter to Smith Rock for a full day climb. Climbers will be available to sign autographs on gear and such. Admission will be $7 and all proceeds will go to support prostate cancer research. The Boulder Stop will be one of the sponsors of the PA Golf Classic held in Bend, OR on Sept. 1, 1999. M ar ke tin g Milestones Yellow pages print and web listings Print and distribute Grand Opening flyer Grand Opening Celebration 1st Annual Llama run Perry Claw Rock Festival PA Golf Classic -- Sponsor for evening hikes Other Mar Apr May Jun Jul Aug Sep Oct Copyright © Palo Alto Software, Inc. 2004 All rights reserved. www.paloalto.com Not for reproduction, publication, or distribution. Pg 21 Table: Milestones Milestones Milestone Yellow pages print and web listings Print and distribute Grand Opening flyer Grand Opening Celebration 1st Annual Llama run Perry Claw Rock Festival PA Golf Classic -- Sponsor for evening hikes Other Totals 5.2 Marketing Organization Start Date 4/1/99 4/1/99 5/15/99 7/23/99 8/1/99 9/1/99 3/1/99 Sa m ple Boulder Stop -- Sample Plan End Date 5/1/99 5/15/99 5/15/99 7/23/99 8/3/99 10/1/99 4/1/99 Budget $500 $400 $3,500 $2,000 $3,500 $2,000 $0 $11,900 Manager Silverton Silverton Walsh Walsh Walsh Walsh ABC Department Marketing Marketing Marketing Marketing Marketing Marketing Department 5.3 Contingency Planning Pla nP ro We are a small company where sales and marketing consist of two to three people. Bill Walsh and Pan Silverton will lead and implement the marketing programs, while part-time employees will carry out many of the tasks. The marketing organization is very informal, but tightly managed, with clear obtainable goals, and a thorough list of deadlines. Details are very important to the implementation of our marketing plan, the most important being those that are unseen. Marketing will do its very best to plan for the unforeseeable. Contingency planning is an important part of the marketing organization, as noted in the previous topic. M ar ke tin g Our biggest potential problems, the ones that will limit our ability to create programs, are financial. Our budget relies on sales figures that are reliable and well-researched, but are also affected by such things as weather and political difficulties. Our first plan is a 'scale-down' plan; that is, we will eliminate the Llama run, Rock festival, and PA Golf sponsorship and wait out the year, relying on website and direct sales to cover our cost of doing business. The direct business alone will not support our financial commitments, but with excellent credit, inventory as collateral, and basic Smith Rock foot traffic, we will survive without popular marketing programs. If we lose a part-time employee, there will be plenty to find elsewhere. If we lose Pan Silverton, his skills will be difficult to replace, but we will have plenty of quality applicants living in the Bend/Redmond area. Will also have the option of hiring away competitors' employees, as they are poorly paid and are given very little company ownership. Our climbing gear supply chain will survive as long as there are many competitors making climbing gear and powerful international service companies to deliver the gear. We will never have difficulty finding coffee, because this IS the Pacific Northwest and fresh-roasted coffee/espresso beans are available in abundance. Copyright © Palo Alto Software, Inc. 2004 All rights reserved. www.paloalto.com Not for reproduction, publication, or distribution. Pg 22 Sa m pl Boulder Stop -- Sample Plan Appendix Appendix Table: Sales Forecast Jun 428 41 26 2,448 3,366 337 51 255 0 6,951 Unit Prices Carabiners Ropes Books and Magazines Cookies and Cones Espresso Regulars Espresso Shakes Gear Rentals All Other Gear Other May $9.00 $140.00 $12.00 $1.00 $1.75 $2.65 $4.00 $20.00 $0.00 Jun $9.03 $140.47 $12.04 $1.00 $1.76 $2.66 $4.01 $20.07 $0.00 Sales Carabiners Ropes Books and Magazines Cookies and Cones Espresso Regulars Espresso Shakes Gear Rentals All Other Gear Other Total Sales May $3,780 $5,600 $300 $2,400 $5,775 $875 $200 $5,000 $0 $23,930 Jun $3,868 $5,731 $307 $2,456 $5,910 $895 $205 $5,117 $0 $24,489 Direct Unit Costs Carabiners Ropes Books and Magazines Cookies and Cones Espresso Regulars Espresso Shakes Gear Rentals All Other Gear Other May $3.50 $55.00 $0.75 $0.10 $0.25 $0.40 $0.25 $12.00 $0.00 Jun $3.51 $55.14 $0.75 $0.10 $0.25 $0.40 $0.25 $12.03 $0.00 May $1,470 $2,200 $19 $240 $825 $132 $13 $3,000 $0 $7,898 Jun $1,503 $2,250 $19 $245 $844 $135 $13 $3,068 $0 $8,076 Direct Cost of Sales Carabiners Ropes Books and Magazines Cookies and Cones Espresso Regulars Espresso Shakes Gear Rentals All Other Gear Other Subtotal Direct Cost of Sales Jul 437 42 26 2,497 3,433 343 52 260 0 7,090 Aug 446 42 27 2,547 3,502 350 53 265 0 7,232 Sep 455 43 27 2,598 3,572 357 54 271 0 7,377 Oct 432 41 26 2,468 3,393 339 51 276 0 7,027 Nov 108 10 0 0 0 0 0 69 0 187 Dec 108 10 0 0 0 0 0 69 0 187 Jan 108 10 0 0 0 0 0 69 0 187 Feb 108 10 0 0 0 0 0 69 0 187 Mar 108 10 0 0 0 0 0 69 0 187 Apr 420 30 25 2,400 3,300 330 50 250 0 6,805 Jul $9.06 $140.93 $12.08 $1.01 $1.76 $2.67 $4.03 $20.13 $0.00 Aug $9.09 $141.40 $12.12 $1.01 $1.77 $2.68 $4.04 $20.20 $0.00 Sep $9.12 $141.88 $12.16 $1.01 $1.77 $2.69 $4.05 $20.27 $0.00 Oct $9.15 $142.35 $12.20 $1.02 $1.78 $2.69 $4.07 $20.34 $0.00 Nov $9.18 $142.82 $12.24 $1.02 $1.79 $2.70 $4.08 $20.40 $0.00 Dec $9.21 $143.30 $12.28 $1.02 $1.79 $2.71 $4.09 $20.47 $0.00 Jan $9.24 $143.78 $12.32 $1.03 $1.80 $2.72 $4.11 $20.54 $0.00 Feb $9.27 $144.26 $12.36 $1.03 $1.80 $2.73 $4.12 $20.61 $0.00 Mar $9.30 $144.74 $12.41 $1.03 $1.81 $2.74 $4.14 $20.68 $0.00 Apr $9.34 $145.22 $12.45 $1.04 $1.82 $2.75 $4.15 $20.75 $0.00 Jul $3,959 $5,865 $314 $2,514 $6,048 $916 $209 $5,237 $0 $25,063 Aug $4,052 $6,002 $322 $2,572 $6,190 $937 $214 $5,359 $0 $25,649 Sep $4,146 $6,143 $329 $2,633 $6,335 $959 $219 $5,485 $0 $26,249 Oct $3,952 $5,855 $314 $2,509 $6,038 $914 $209 $5,613 $0 $25,405 Nov $991 $1,469 $0 $0 $0 $0 $0 $1,408 $0 $3,868 Dec $995 $1,474 $0 $0 $0 $0 $0 $1,413 $0 $3,881 Jan $998 $1,478 $0 $0 $0 $0 $0 $1,417 $0 $3,894 Feb $1,001 $1,483 $0 $0 $0 $0 $0 $1,422 $0 $3,907 Mar $1,005 $1,488 $0 $0 $0 $0 $0 $1,427 $0 $3,920 Apr $3,921 $4,357 $311 $2,489 $5,990 $907 $207 $5,186 $0 $23,369 Jul $3.52 $55.28 $0.75 $0.10 $0.25 $0.40 $0.25 $12.06 $0.00 Aug $3.53 $55.41 $0.76 $0.10 $0.25 $0.40 $0.25 $12.09 $0.00 Sep $3.54 $55.55 $0.76 $0.10 $0.25 $0.40 $0.25 $12.12 $0.00 Oct $3.54 $55.69 $0.76 $0.10 $0.25 $0.41 $0.25 $12.15 $0.00 Nov $3.55 $55.83 $0.76 $0.10 $0.25 $0.41 $0.25 $12.18 $0.00 Dec $3.56 $55.97 $0.76 $0.10 $0.25 $0.41 $0.25 $12.21 $0.00 Jan $3.57 $56.11 $0.77 $0.10 $0.26 $0.41 $0.26 $12.24 $0.00 Feb $3.58 $56.25 $0.77 $0.10 $0.26 $0.41 $0.26 $12.27 $0.00 Mar $3.59 $56.39 $0.77 $0.10 $0.26 $0.41 $0.26 $12.30 $0.00 Apr $3.60 $56.53 $0.77 $0.10 $0.26 $0.41 $0.26 $12.33 $0.00 Jul $1,537 $2,300 $20 $251 $863 $138 $13 $3,137 $0 $8,258 Aug $1,572 $2,352 $20 $257 $882 $141 $13 $3,208 $0 $8,445 Sep $1,607 $2,405 $20 $262 $902 $144 $14 $3,280 $0 $8,635 Oct $1,531 $2,291 $20 $250 $859 $137 $13 $3,354 $0 $8,454 Nov $384 $574 $0 $0 $0 $0 $0 $841 $0 $1,798 Dec $385 $576 $0 $0 $0 $0 $0 $843 $0 $1,803 Jan $386 $577 $0 $0 $0 $0 $0 $845 $0 $1,807 Feb $386 $578 $0 $0 $0 $0 $0 $847 $0 $1,812 Mar $387 $580 $0 $0 $0 $0 $0 $849 $0 $1,816 Apr $1,511 $1,696 $19 $247 $848 $136 $13 $3,084 $0 $7,553 Pla nP ro May 420 40 25 2,400 3,300 330 50 250 0 6,815 ar ke tin g Sales Forecast Unit Sales Carabiners Ropes Books and Magazines Cookies and Cones Espresso Regulars Espresso Shakes Gear Rentals All Other Gear Other Total Unit Sales Copyright © Palo Alto Software, Inc. 2004 All rights reserved. www.paloalto.com Not for reproduction, publication, or distribution. Pg 1 Sa m pl Boulder Stop -- Sample Plan Appendix Appendix Table: Marketing Expense Budget Marketing Expense Budget Advertising/Promotion Sponsored Activities Direct Marketing Activities Other Jun $350 $0 $6,000 $0 -----------$6,350 25.93% $10,063 41.09% Jul $350 $2,000 $6,000 $0 -----------$8,350 33.32% $8,454 33.73% Aug $350 $3,500 $6,000 $0 -----------$9,850 38.40% $7,354 28.67% Sep $350 $2,000 $6,000 $0 -----------$8,350 31.81% $9,264 35.29% Oct $350 $0 $6,000 $0 -----------$6,350 25.00% $10,601 41.73% Nov $0 $0 $1,500 $0 -----------$1,500 38.78% $570 14.73% Dec $0 $0 $1,500 $0 -----------$1,500 38.65% $578 14.90% Jan $0 $0 $1,500 $0 -----------$1,500 38.52% $587 15.06% Feb $0 $0 $1,500 $0 -----------$1,500 38.39% $595 15.23% Mar $0 $0 $1,500 $0 -----------$1,500 38.27% $603 15.40% Apr $350 $250 $6,000 $0 -----------$6,600 28.24% $9,217 39.44% ar ke tin g Pla nP ro Total Sales and Marketing Expenses Percent of Sales Contribution Margin Contribution Margin / Sales May $900 $3,500 $6,000 $0 -----------$10,400 43.46% $5,631 23.53% Copyright © Palo Alto Software, Inc. 2004 All rights reserved. www.paloalto.com Not for reproduction, publication, or distribution. Pg 2 Sa m pl Boulder Stop -- Sample Plan Appendix Appendix Table: Contribution Margin Contribution Margin Marketing Expense Budget Advertising/Promotion Sponsored Activities Direct Marketing Activities Other Total Sales and Marketing Expenses Percent of Sales Contribution Margin Contribution Margin / Sales Jun $24,489 $8,076 $0 -----------$8,076 $16,413 67.02% Jul $25,063 $8,258 $0 -----------$8,258 $16,804 67.05% Aug $25,649 $8,445 $0 -----------$8,445 $17,204 67.08% Sep $26,249 $8,635 $0 -----------$8,635 $17,614 67.10% May $900 $3,500 $6,000 $0 -----------$10,400 43.46% $5,631 23.53% Jun $350 $0 $6,000 $0 -----------$6,350 25.93% $10,063 41.09% Jul $350 $2,000 $6,000 $0 -----------$8,350 33.32% $8,454 33.73% Aug $350 $3,500 $6,000 $0 -----------$9,850 38.40% $7,354 28.67% Sep $350 $2,000 $6,000 $0 -----------$8,350 31.81% $9,264 35.29% Oct $25,405 $8,454 $0 -----------$8,454 $16,951 66.72% Nov $3,868 $1,798 $0 -----------$1,798 $2,070 53.51% Dec $3,881 $1,803 $0 -----------$1,803 $2,078 53.55% Jan $3,894 $1,807 $0 -----------$1,807 $2,087 53.59% Feb $3,907 $1,812 $0 -----------$1,812 $2,095 53.62% Mar $3,920 $1,816 $0 -----------$1,816 $2,103 53.66% Apr $23,369 $7,553 $0 -----------$7,553 $15,817 67.68% Oct $350 $0 $6,000 $0 -----------$6,350 25.00% $10,601 41.73% Nov $0 $0 $1,500 $0 -----------$1,500 38.78% $570 14.73% Dec $0 $0 $1,500 $0 -----------$1,500 38.65% $578 14.90% Jan $0 $0 $1,500 $0 -----------$1,500 38.52% $587 15.06% Feb $0 $0 $1,500 $0 -----------$1,500 38.39% $595 15.23% Mar $0 $0 $1,500 $0 -----------$1,500 38.27% $603 15.40% Apr $350 $250 $6,000 $0 -----------$6,600 28.24% $9,217 39.44% Pla nP ro Cost of Goods Sold Gross Margin Gross Margin % May $23,930 $7,898 $0 -----------$7,898 $16,031 66.99% ar ke tin g Sales Direct Costs of Goods Other Variable Costs of Sales Copyright © Palo Alto Software, Inc. 2004 All rights reserved. www.paloalto.com Not for reproduction, publication, or distribution. 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