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Unformatted text preview: Marketing Lecture – Marketing Plans Marketing Differentiation & Penetration are Keys to Market Planning Gene N. Landrum, Ph.D. E-Mail: [email protected] Dr. Gene doing research at the Leonardo da Vinci Museum in Florence, Italy If you don’t know where you’re going, If any road will take you! Get a map or a plan or pay dearly for a wayward journey wayward Experiential Learning is About Thinking on Your Feet Experiential In this class you are expected to learn to think on your own and will never be punished – get a bad grade for doing so. Try something radical in your plan or presentation and find how it empowers you! What is Learning About? It is growth via experience. Apply textbook theories to on-the-street problems – only try to sell Innovators and Early Adopters since Laggards don’t buy. An example is the ban on using graphics to illustrate an example by the APA. The Chinese are correct in that a picture is worth 1000’s of words. It’s a road map to find what your position is relative to others Without a plan you have no idea of where you Without are going and any road will take you. Document your dreams with a roadmap – in this class the map is the Marketing Plan. map Make sure to chase what you love and know and Make not delude yourself via arrogance or ignorance both of which can destroy your plans both Identify market voids and adversarial weakness Identify and bet it all in those arenas and even if you fail you will have succeeded in altering markets. you Market Planning Strategy Market EXPERIENTIAL CLASS WORK EXPERIENTIAL “We learn best from our experience” Senge aEach student will analyze one chapter in the textbook and deliver it to the class via a Power Point presentation. Outline the top 10 theories from one chapter and enhance it with at least one web citation. t Grades for presentations are based on Breadth (Summarize), Professional delivery (look at audience), Comprehension and thoroughness of materials t There are no excuses for missing class when a presentation is due (call from the jail or the hospital); no-shows fail in school and in life Being nervous is good. It makes you try harder and be better! Each slide should take no more than 30 seconds. It will not be good if you do not start with 5 minutes, reduce to 2 and then pare it to 30 seconds. You are expected to summarize the materials in a professional manner. The 4 P’s in Marketing a Product is Research Driven The The Product (Wrist-Net) cannot be Promoted (advertised), Priced Product Promoted (high/low) or Placed (retail store where sold) without insight into (high/low) Placed the end user (target consumer/market) without adequate research into the opportunities and threats in those markets Product Strategy: Always define the product in terms of its attraction to target consumer via specifications, benefits, unique features that make it special – a rendering saves many words Promotional Strategy: Advertising and publicity must be aimed at target maraket and build brand awareness Pricing Strategy: Do a competitive analysis of what similar products sell for and price range – high, low, medium - relative to the price elasticity – low price sells more Place Strategy: Develop sales distribution strategy – consumer products will sell through retail, direct or on the web; a service may be delivered in a Place of business Key Questions to Pose in Marketing & Business Planning What – Who – Where – When – Why - How WHAT business are you in? Define Target Markets with demographic analysis WHO are the Primary, Secondary & Tertiary Customers or Clients? WHERE will the customer want to buy? Online, Retail, Direct, Distribution strategy? WHEN will they buy? Is business seasonal? Frequency of return visits? Sales cycle? WHY? What is the motivating force of your product or service that appeals to your customer? Is it different enough to make a difference? Is price what they can afford? HOW? Can I get the bucks to make it happen and am I qualified to operate or should I pay someone else to run the joint? Who provides the seed $? Have I put up enough? Begin by defining What business you are in with an appropriate mission and define the Primary demographic, geographic, psychographic customer characteristics. Where defines the place or distribution strategy to get to the low fruit clients. When is about seasonality and sales cycle or frequency of visits. Why demands that you differentiate your product from Brand X ala benefits and features – go where the pack fears. If unaware of your primal advantage you are in trouble. How will you find the seed $? Angels want to think you can’t fail as you have personally mortgaged you to the hilt and have put every cent you have on the table. No one will give you money to make a big salary? Scrap the idea! Marketing Plan Research Paper Requirements Marketing PC generated with APA citations on all graphs or illustrations; Graphics to enhance the imagery is okay in this class as “humans think not in words but in images” Paper must include a minimum of 3 bibliographical citations that will be tied to the Reference Section at the end. Make a back up copy as the instructor keeps your paper Use 12 Point Times New Roman Type in the paper and at least 24-point type on your Power Point presentation that will summarize your findings. It will be delivered in session #15 The Power Point presentation should include no more than a dozen slides and take approximately 20 minutes The Marketing Plan Paper is due in week fifteen Business Plan Topics to Choose From Business Joe’s Security Business or Pizza Emporium Joe’s Description: Pick any family business or one that you have always dreamed of owning and operating – Mary’s Pizza Parlor, Kid’s Playland, etc. (Your Name) Internet Café (Your Description: Located in SW, FL with a dozen PC’s online appealing to vacationers in need of communicating while imbibing in: coffee, teas, Danish, deserts, wine and cheese; a socializing venue for techies and foreigners featuring couches, round tables and chairs. Price and promote through pertinent mediums. (Your Name) Matchmaker Maven Matchmaker Description: Create a website featuring matchmaking among some definitive age group (define in Target Market section) and make sure to price and promote to get enough traffic to be profitable with a definitive Strategic Marketing opportunity. Orgone Energy Truth Ring Orgone Description: Launch a Truth Ring; a magical ring that within ten feet will warm the fingers of anyone shaking hands; if lying the hands will be stone cold. Price it at $1000 in either a man’s or woman’s version. Precise target marketing is crucial as is a Mission, Vision, packaging, promotions and advertising; the Strategic Marketing Opportunity section is crucial as is capitalization strategy Marketing Plan – Product or Service Marketing TABLE OF CONTENTS COVER PAGE (TITLE, TO WHOM, FROM WHOM, DATE) TABLE OF CONTENTS - [This is due in week six of the course] include: Critical Thinking (Innovative analysis of new product idea), Taking Initiative (developing a Marketing Plan to implement your idea), Effective Communications (deliver paper in class), Leadership Ability (Role playing as CEO of firm in plan), Research Ability (researching the Target Markets in plan) MISSION OR VISION STATEMENT (CREDO: predicting your destiny) PRODUCT/SERVICE DEFINITION (WHAT IS IT, PICTURE, PRICE, PACKAGING?) TARGET MARKETS (PRIMARY & SECONDARY #’S OF POTENTIAL CUSTOMERS) STRATEGIC MARKETING OPPORTUNITY (WHAT IS YOUR EDGE/VALUE ADDED) PRICING STRATEGY (PRICE ELASTICITY: WILL YOU SELL MORE IF CHEAP? ) PROMOTION STRATEGY (INCL: PRESS RELEASE, WEB PAGE MOCKUP, & LIST OF HOW YOU INTEND TO PROMOTE & ADVERTISE YOUR PRODUCT) DISTRIBUTION STRATEGY (DIRECT VIA WEB, RETAIL STORE? OR REPS?) INCLUDE A 5 YEAR SALES FORECAST SHOWING UNITS, $, & CGS) – TIE THE SALES FORECAST TO THE TARGET MARKETS IE PIPELINE FILL:10% OF 6000 TEACHERS WILL BUY 600 ITEMS IN THREE YEARS (200 PER YEAR) MANAGEMENT CHART (BIO SHEET ON YOU AS CEO & WHY QUALIFICATONS?) COMPETITIVE ANALYSIS – SWOT ANALYSIS – BE HONEST BUT POSITIVE BIBLIOGRAPHY (GIVE 4 CITATIONS VALIDATING TARGET STATISTICAL DATA) GETTING STARTED GETTING PICK PRODUCT OR SERVICE THAT IS EXCITING TO YOU; ONE THAT YOU CAN GET INTO (EXAMPLE: MAGIC DIET PILLS, VIAGRA BEER, ELDER-CARE, ANTI-WRINKLE CREAMS – PICK WHAT YOU KNOW) WRITE A MISSION STATEMENT THAT IS YOUR CREDO, DREAM OR PHILOSOPHY; ITSHOULD DEFINE PARAMETERS OF AN IDEA IDENTIFY TARGET MARKETS: PRIMARY & SECONDARY AND QUANTIFY THEM BY AGE & OTHER DEMOGRAPHICS – SHOW THEM IN A PIE CHART IN PLAN IDENTIFY PARAMETERS OR MAGNITUDE OF PROJECT? IS IT COLLIER COUNTY, FLORIDA, U.S., OR THE WORLD? YOU CAN’T BEGIN BEFORE DEFINING THE HUMAN AND FINANCIAL RESOURCES REQUIRED FOR THE PROJECT Picking a Brand Name in Mass Marketing Picking Brand names are key in mass communications, conjuring an image to sell Brand products/services; P.T. Barnum made midget Charles Stratton into General Tom Thumb; Henry Deutschendorph, Jr. didn’t sell like the moniker John Denver Thumb; A brand name should be easy to say, spell & remember, fit the product, tell a story, work in various mediums and be eye-candy aSEND MESSAGE: VOLKSWAGEN MEANING “PEOPLE’S CAR” aTELLS A STORY (WGN: Chicago Tribune’s broadcast – World’s Greatest Newspaper) aSHORT WORDS BEST (INTEL RATHER THAN INTELLIGENT ELECTRONICS) t BRANDS SHOULD NOT BE TOO TOPICAL (MOTEL 6, KFC = FRIED TO FRESH) aBRANDS SHOULD ELICIT INNER EMOTION (GODIVA, VIRGIN BRIDES, NIKE) aNOSTALGIC START - WHAT DOES 7-ELEVEN STAND FOR? HRS OF OPERATION? aPRODUCT CAN OFFER INSIGHT OR METAPHOR OF BUSINESS: MILK), WALKMAN, CURVES (FITNESS), SUBWAY (QUICK FOOD) SILK (SOY aCONVEY A PHILOSOPHIC MESSAGE (WD-40, CISCO, SOBE’S, BLACKBOARD) Mission & Vision Statements – Credos not Definitions Mission An ideology or philosophy; GM’s mission is to deliver efficient transportation with cars like Cadillac, Chevy as a result. In 2050 transportation MICROSOFT’S MISSION may be jetpacks MICROSOFT’S “A PC on every desk” (They don’t even build PC’s) AMAZON.COM’S MISSION AMAZON.COM’S “Work Hard, Have Fun, Make History” MISSION OF NCH – Healthcare System MISSION “To restore, promote, and maintain health in the people we serve” RITZ-CARLTON MISSION “Ladies and Gentlemen serving Ladies and Gentlemen” Missions don’t describe products, they’re a philosophy of life Vision statements should define what you want to become, not how you Vision intend to become it - which is the purview of objectives & goals intend “Our vision is to become the finest integrated health care system in the U.S.” NCH HEALTH CARE VISION VISION STATEMENTS New Product or Firm Elevator Pitch New You’ve got 30 seconds to tell your story. It had better be simple You’ve and succinctly communicate your message to an angel investor and Three-Five-Floor Pitch on a Big Cheese Venture A new exciting entertainment emporium for the whole family. It new will be fun with pizza, games and amusements, and generate $2 million in annual sales revenues with a 20% pre-tax profit – double that of other such establishments. Studies show people will love the concept and we only need $2 million to make it happen. concept Eight- Ten Floor Add-On Pitch Investors will be offered a seat on the Board of Directors and a Investors sweetheart deal to make it worth their while - $100,000 for 2% equity in the firm with a realistic opportunity for a 30-40 times return on their investment in four to six years – like a biz plan? return Strategic Market Opportunity for Big Cheese Pizza Strategic Being Radically Different is our market edge Being Big Cheese is not a normal pizza operation. It is unique in these ways: Nothing exists in this market area, a virtual market void, for the whole family to eat, have fun and be entertained Virtual Reality state-of-the-art games and play items such as Air Hockey, Foosball and ski-balls will grace the playland area This unit will feature crawl apparatus around the ceiling, walls including rock-climb in play area – adults can’t go but can watch A costumed squirrel will hand out Fortune Nuts treats free There are 125,000 children in the 2-11 range in the Ft. Myers/Naples SMSA. This equals 50,000 target households Assuming only 20% of permanent households visit once each quarter spending $40 each visit the store will generate $1.6 million New Product or Firm Elevator Pitch New You have about 30 seconds to tell your story. It better be simple You and succinctly communicate your message to an angel investor and Three-Five-Floor Pitch on a Big Cheese Venture A new exciting entertainment emporium for the whole family due new to sharing fun, pizza, games and amusements. Sales of $2 million annually with a 20% pre-tax profit ($400K) – 2X-4X of similar establishments and 50% ROI on your $800,000 invested. Studies show people are prone to do what the family as a unit loves – no matter if it is a bit pricey. matter If You have another 5 floors Keep on Pitching Investors will have a Board seat and be given a sweetheart deal for Investors stock in the new entity - 3% equity for each $100K and up to 30% for a $1M investment. Projections call for a 30X-40X return in four to six years – Would you like a copy of the biz plan? to There are 4 P’s in Marketing a Product or Service The Product - Internet Café or Orgone Truth Ring - cannot be Product Promoted (advertised), Priced (high/low) or Placed (sold) without Promoted Priced Placed insight into the end user (target consumer/market) Product Strategy: Always define the product – Internet café on 5th Ave. South in Naples – a rendering saves many words Promotional Strategy: Advertising and publicity aimed at target market – ads on the Weather Channel for vacationers Pricing Strategy: What would you pay for coffee, Danish and going online to get your e-mail in Paris? – high, low, medium relative to the price elasticity Place Strategy: Develop sales distribution strategy for Orgone Truth Ring; what places will sell it best; Gift stores, Airline catalogues, Sharper-Image stores & catalog Differentiation & Penetration are Keys to Market Differentiation Planning Planning TARGET MARKETS – Define & Quantify TARGET For planning it is key to segment potential customers into Primary, Secondary & Tertiary groups or market segments via detail on their demographic profile. Then quantify your findings – how many are there in which locales. IF YOU ARE SELLING TO TEACHERS? IF Tell me how many teachers are in the target market area of Collier or Lee County, Florida - a Pie Chart will enhance the plan and the grade IF YOUR PRODUCT IS AIMED AT SINGLES? How many singles between the ages of 18 and 35 are in SW, FL (show Bar Chart on the various market segments) IF YOU ARE SELLING ENERGY BARS? Quantify the #’s of retailers in various specialties who will stock and sell your product – Health Food Stores, Drug stores, Pro Shops, etc Attack Unsatisfied Market Needs-Never Products Identify Unfulfilled Needs and Fill Them Elegantly! Identify and the Quantify in Pie or Bar Charts the #’s in your target markets or in your demographic profiles target Play Emporium Targeted Customer Strategy Primary Targets: Family Units with 2-11 year olds within 15 miles of store Primary (45,000 kids under age 14 in Collier County and 60,000 in Lee County) Secondary Targets: Kids B’Day Parties and other Special Events within 25 miles of store – make it affordable and easy for mothers (estimate the # of birthday parties and special events to be held weekly) Tertiary Targets: Little League teams, Parents W/O Partners, Special Ed student groups, YMCA, ball teams or school groups (estimate the # of special groups attending each month) Timeline Chart for High-Tech Product Launch Timeline 1st sale Event/Function Q-1 Q-2 Q-3 Q-4 Q-5 Q-6 SEEDS $ RAISED FOR ENG X Engineering Timeline -----------------X Establish Corp Facility ---------X Design Display Package for offshore Mfg. -------------X Hire Key Sales Personnel to Launch ----------X Develop Price Sheets, brochures, Press Kit, Co-op Package X Manufacturing Negotiated ------------X 2nd Traunch of Capital - $2M X Manufacturing Commences - 5000 units ---------------X FORMAL LAUNCH IN NYC, VEGAS, ORLANDO X Press Release in Orlando, NYC & Naples with Media ------X Key Personnel Recruited/Hired ---------------X Attend Consumer Electronics in Vegas to Announce -------------------X First Million in Sales Revenues ---------------X $5 Million in Sales Revenues --------------X Demographic Analysis of US Market Potential by SMSA’S Demographic METHOD OF SEGMENTING MARKETS & SETTING SALES QUOTAS SOURCE: SALES & MARKETING BUYING POWER INDEX (2005) AREA # STATES HSHLDS BPI - % #RET SLS PER/HS REST/POT (2008 data) SOUTH - 12 STATES 35.980M 7.4M 140K (2008) 30.25% 6.13% .1429% .2034 .2517 .6806 .5194 23.98% 22.23% 24.6% 100% (2208) $34,584 $33,740 $42,170 $41,861 $29,979 $44,207 $36,043 $38,500 $34,650 $42,745 774 1:150K 240 49 1 1.6 2 5 4 182 175 168 FLORIDA - 1 STATE NAPLES FT. MYERS/CAPE CORAL 235K SARASOTA/BRADENTON 311K FT. LAUDERDALE W. PALM BCH/BOCA EAST 11 STATES 730K 551K 27.385M 26.335M 25.335M 116.036M CENTRAL 14 STATES WEST 13 STATES TOTALS 50 STATES Florida Play Emporium Potential Store Opening Analysis MARKET AREAS 1 DAYTONA/ST. AUGUSTINE 2 FT. LAUDERDALE/POMP/HOLL 3 FT. MYERS/CAPE CORAL/NAPLES 4 FT. PIERCE/STUART/VERO 5 GAINESVILLE/OCALA 6 JACKSONVILLE 7 LAKELAND/WINTER HAVEN 8 MELBOURNE/TITUSVILLE 9 MIAMI + KEYS 10 ORLANDO 11 PENSACOLA/FT. WALTON/PAN 12 SARASOTA/BRADENTON/CHAR. 13 TALLAHASSEE METRO AREA 14 TAMPA/ST. PETE/CLEARWTR 15 WEST PALM BEACH/BOCA RATON TOTALS PRIMARY TARGET MARKETS # Hshlds 222K 778K 321K 142K 209K 462K 204K 213K 900K 717K 250K 350K 150K 1.1M 533K 6.6M 3808 H-EBI $ 45K $ 55K $ 60K $ 52K $ 43K $ 59K $ 44K $ 46K $ 50K $ 58K $ 46K $ 55K $ 56K $ 53K $ 73K $ 54K $ 56K %-EBI .16 .66 .30 .11 .14 .40 .15 .15 ..75 .65 ..20 .28 .12 .88 .51 5.5% 3.3% # UNITS 4 15 6 3 4 9 4 4 18 14 5 7 3 20 10 126 69 % POT 3% 12% 5% 2% 2% 7% 3% 3% 14% 11% 4% 6% 2% 16% 8% 100% 55% * ITALICS = PRIMARY TARGET OPENINGS (One per each 50K Households in Target Market) TARGET MARKET CATERING PRODUCTS TARGET Sports Bars, Stadiums, Spas, Cruise Ships, Delis & Pizza, Fitness Centers, Pro Shops, Ice Cream shops infoUSA & DATABASE AMERICA 2005 TYPE OUTLET TYPE DELIS, COFFEE SHOPS & PIZZA CRUISE SHIPS & CAMPGROUNDS GOLF & TENNIS PRO SHOPS FITNESS CENTERS (SPAS) SPORTS BARS ICE CREAM PARLORS FRATERNAL ORG (VFW, ELKS) 15,000 HOTELS/MOTELS (OVER 100 ROOMS) MINITURE GOLF, SKI RESORTS, FAIRS, FESTIVALS, CARNIVALS TOTALS # U. S. OUTLETS FL 100% 70,000 12,000 20,000 15,000 45,000 15,000 900 10,000 5,000 2,000 209,000 6% 4,200 720 1,200 900 2,700 900 4,500 600 300 120 12,540 SOUTH 30% 21,000 3,600 6,000 4,500 13,500 4,500 2,400 3,000 1,500 600 62,700 INN/ADPT+EARLY- MAJ. 16% 11,200 1,920 3,200 2,400 7,200 2,400 7,500 1,600 800 320 33,440 50% 35,000 6,000 10,000 7,500 22,500 7,500 5,000 2,500 1,000 105,500 PRICING STRATEGY WRINKLE CREAM PRICING For a two-step distribution operation. Give a brief write-up on For your pricing strategy in your Marketing Plan your PRODUCT PRICED DIFFERENTLY FOR SPECIALTY CATALOGS, INTERNET, PRODUCT PHYSICIANS THAN FOR DEPARTMENT STORES AND DRUB STORES PHYSICIANS SPECIALTY RETAILERS (50% MARGINS) PRODUCT ECONOMY SIZE FAMILY SIZE RETAIL $60 $100 WHLSL $30 $50 COST $9 $12 MARGIN % 70% 75% MASS MARKET RETAILERS (40% MARGINS) PRODUCT ECONOMY SIZE FAMILY SIZE RETAIL $50 $83 WHLSL $30 $50 COST $9 $12 MARGIN % 70% 75% Sample Target Market Sample Analysis for Business Plans Analysis Viagra Beer Target Markets Segment Markets Relative to Sales Potential Tertiary M arket: 50-Yrs & UP 20% Secondary M arket: Gifts 2 0-Somethings 30% Primary M arket: Gifts 4 0-Yr olds 50% Sample Target Costs for Marketing a New Product Sample Research the Potential Pipeline Fill in the U.S. Research Unit sales of 10 Wrinkle Creams to the 50,000 US supermarkets equals 500,000 in unit sales. At $10 each this extrapolates to $15 million in revenues – prior to one consumer sale being made Retail penetration rates of potential clients or retailers should be conservative at first with a gradual build-up over time It is prudent to make projections using Optimistic, Realistic & Pessimistic penetration rates ala: There are 35,000 US pharmacies. In plan start with Florida (6%) of US market or 2100 stores @ $100 a year equals $210,000 Show sales to the 15,000 Fitness Centers from Naples to Sarasota @ .06% of national potential – thus 90 units to sell Sales Projections Utilizing Retail Pipeline Data Sales Example: Birth-Control Gum sold at retail at $9.99 and wholesale at keystone for $5.00 in master packs of six each or $30 per pack Primary Market: Y-1 Y-2 2% 700 $21K $252K Y-3 5% 1750 $53K $630K Y-4 20% 7000 $210K $2.5M Y-5 30% 10,500 $315K $3.8M Penetration Rate 1% 35K Drug Stores = 350 Sales $30 mp of 6@ $5 $10.5K Consumer Sales 6/mo $126K Secondary Market: Web Sales in Units Sales @ 10 each Total Sales Projection 1000 $10K 5000 $50K 25,000 $250K $933K 50,000 100,000 $500K $1M $3.2M $5.1M $146.5K $323K Pro-Forma Wrinkle Cream Income Statement Pro-Forma Cost of Goods Sold: between 25%-35% of Sales Revenues in consumer products YR-1 YR-1 # Wrinkle Cream Large Jars Revenues @ $20ea (retail $40) # Wrinkle Cream Tubes Revenues @ $10 (retail $20) TOTAL UNITS SOLD TOTAL REVENUES COST OF GOODS (30%) GROSS MARGINS G&A Expenses: Salaries Occupancy Cost (12%) Marketing Expense (10%) Miscellaneous Expense Total Operating Expense Net Profit/Loss 10,000 $200,000 5000 $50,000 15,000 YR-2 20,000 $400,000 10,000 $100,000 30,000 YR-3 30,000 $600,000 15,000 $150,000 45,000 YR-4 44,000 $800,000 20,000 $200,000 64,000 YR-5 50,000 $1,000,000 25,000 $250,000 75,000 $250,000 $500,000 $750,000 $1,000,000 $1,250,000 $75,000 $150,000 $225,000 $300,000 $375,000 $175,000 $350,000 $525,000 $700,000 $875,000 $150,000 $ 30,000 $ 35,000 $ 35,000 $200,000 $170,000 $ 50,000 $ 50,000 $ 40,000 $310,000 $200,000 $ 80,000 $ 65,000 $ 55,000 $400,000 $300,000 $100,000 $ 75,000 $ 60,000 $535,000 $350,000 $110,000 $ 80,000 $ 70,000 $610,000 ($ 25,000) $ 40,000 $125,000 $165,000 $265,000 Assets should be around 30% of sales revenues; Liabilities about ½ of the Assets Balance Sheet – A Snapshot of what you Own & What you Owe at moment in time YR-1 YR-2 YR-3 YR-4 YR-5 Five Year Balance Sheet Example Five ASSETS: CASH ACCOUNTS REC. (1.5M) INVENTORY (2M) EQUIPMENT TOTAL ASSETS LIABILITIES: ACCOUNTS PAYABLE BANK LOAN TOTAL LIABILITIES NET WORTH $10,000 30,000 20,000 10,000 $ 70,000 $20,000 $50,000 $30,000 $20,000 $120,000 $ 30,000 $ 80,000 $ 40,000 $ 40,000 $190,000 $ 40,000 $10,0000 $ 50,000 $ 80,000 $270,000 $ 50,000 $120,000 $ 60,000 $100,000 $330,000 $ 20,000 $40,000 $ 20,000 $20,000 $ 40,000 $60.000 $ 30,000 $60,000 $70,000 $30,000 $90,000 $40,000 $100,000 $50,000 $100,000 $130,000 $150000 $90,000 $140,000 $180000 "Luck is a dividend of sweat. The more you sweat, the luckier you get." - Ray Kroc – "Luck McDonald’s Fast Food Entrepreneur McDonald’s Graphic Analysis Enhances Communications – Excel it Graphic in order to optimize communications in Wrinkle Cream Pro-Forma Sales Forecast 80,000 60,000 40,000 20,000 Years $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 1 15,000 $250,000 2 30,000 $500,000 3 45,000 4 64,000 5 75,000 $0 0 Wrinkle Cream Units Wrinkle Cream $ $750,000 $1,000,000 $1,250,000 Sales/Distribution Costs – Variable Expense Sales/Distribution The distribution cost of most products are 70% of sales price: The Retailer = 40%-50%, Sales = 15%, Marketing = 5-10% Retailer TYPICAL SELLING EXPENSE = 15% - 18% of Sales Revenues Distribution includes hiring sales reps at 10% commission and the inside costs of sales personnel ala Customer Service is another 5%-8% TYPICAL MARKETING EXPENSE = 5%/10% of Sales Marketing strategy includes promotions like business cards, flyers, ads, trade shows = 10% of sales for any new start-up venture. TOTAL EXPENSE TO SELL AND MARKET = 25% TOTAL TYPICAL CGS FOR MAKING OR BUYING PRODUCTS = 30% Cost to buy, ship or perform the service. What are the direct costs of delivering that service or product to the end customer? MARKETING PROMOTIONAL STRATEGY MARKETING TYPICALLY RANGES BETWEEN 5%-15% MASS CONSUMER PRODUCTS TYPICALLY BUDGET AT LEAST 10% IN YEAR ONE TO EXPOSE PRODUCTS – THUS BUDGET THE BELOW BUDGET FOR MARKETING FOR A $2.5 MILLION YEAR THE TYPICAL COST OF MARKETING INCLUDES TRADE SHOWS (ONE NATIONAL SHOW IN VEGAS) TRADE & CONSUMER MEDIA 30 SEC TV SPOTS COLLATERAL MATERIALS (BROCHURES, BUSINESS CARDS) WEB PAGE (CREATION & IMPLEMENTATION) PRESS KITS (ARTICLES, SAMPLES, PRESS RELEASE) SAMPLES FOR TRADE SHOW HANDOUTS & KEY BUYERS POINT-OF-PURCHASE DISPLAYS (SLOTTING COST = 8%-15%) TOTALS $ 20,000 8.3% $150,000 62.5% $ 15,000 6.3% $ 10,000 4% $ 10,000 4% $ 5,000 2% $ 30,000 13% $240,000 100% What sales are needed to justify this promotional budget? Marketing Bait & Switch Ploys Marketing FTC bans ads with products not available on the premise the FTC customer will then by the more expensive model Only one chance for 1st date or Product Launch – it had better be Only a Wow! or don’t play the game until you deliver special products Wow! “Your words had better lift people into the clouds” Bob Greene Just be sure they aren’t deceptive or deceiving! Future Possibilities always sell better than Current Realities – Current Selling is and marketing are art forms of passionate invective! Selling If you show up and the ad product is unavailable ask for the If ad manager – you will get the higher priced one for the lower price Landrum Web Site: genelandrum.com Landrum HOME, BIO, LECTURING, CONSULTING, BOOKS, SELF-ASSESSMENTS, MULTI-MEDIA, CONTACT Gene N. Landrum, Ph.D. I nnovation – Creativity - Entrepreneurship Dr. Gene is a high-tech startup specialist turned teacher, author and lecturer. He is an innovator who write and lectures on visionary leadership, innovative methodology and entrepreneurship. Dr. Gene created the Chuck E. Cheese concept of family entertainment among other ventures. Landrum has spent years looking at the underlying factors – Mental Maps – relative to what leads to success and failure. Innovation? – Creative Destruction of the Mind! “When it comes to geniuses, Gene Landrum wrote the book!” Naples Daily News, May 5, 1996 Ph: 941­597­9545 E­mail: [email protected] [MANAGEMENT SAMPLE FOR PLAN] Gene N. Landrum, PhD 7897 Cocobay Drive Naples, Florida 34108 941-597-9545 E-Mail: [email protected] Web Site: genelandrum.com Dr. Gene Landrum is a high-tech start-up executive turned educator and writer. He originated the Chuck E. Cheese concept of family entertainment among other entrepreneurial ventures and after many years of interacting with creative and overachieving personalities decided to write about what made them tick. His doctoral research was on The Innovator Personality spawning lectures on: Innovative Marketing,Visionary Leadership, Keys to Greatness, Passion and Entrepreneurship. Dr. Landrum teaches in the graduate and undergraduate schools. His books can be found in most bookstores. The most noteworthy are: . The Innovative Mind – Stop Thinking, Start Being (2008) Paranoia & Power – Fear & Fame Syndrome (2007) Empowerment: The Competitive Edge in Sports, Business & Life (2006) The Superman Syndrome – You are what you believe (2005) Entrepreneurial Genius – The Power of Passion (2004) Sybaritic Genius – Sex Drive & Success (2001) Eight Keys to Greatness (1999) Media Release Media CONTACT: By Gene N. Landrum, PhD Phone: 239-597-9545 E-Mail: [email protected] SUBJECT: The Superman Syndrome – You become what you think ISBN: 0-595-34697-9 Have you looked within for a mythical hero-mentor for transformation? Dr. Gene admonishes everyone to tattoo Superman on their psyche to permit them to leap tall adversaries and think faster than a speeding bullet! Gene Landrum’s 12th book, The Superman Syndrome, looks into that mystical science of selfmotivation that he describes as Mythical-Hero-Mentoring. Sounds juvenile but those intrepid souls capable of stepping into a metaphorical phone booth and donning a Superman persona are better equipped for dealing with life’s vagaries than those who remain grounded in tradition. Those individuals who can become what they are not can end up being more than they could otherwise be. Landrum uses this theme for Chapter One that is titled, Titans are Synthesized Supermen on a trek to omnipotence. Effective Entrepreneurial Communications Effective USA Today (Nov. 10, 2008 p. 3B) Ed Iwata, Kawasaki’s Reality Check Guy Kawasaki, an eminently successful Silicon Valley VC, was asked to be CEO of Yahoo in the early 90’s. He turned it down saying, “It was a $2 - $3 billion error.” saying, Advice from Kawasake for would-be entrepreneurs aExplain your business in 30 seconds – the average attention Explain span of a venture capitalist. Make an elevator pitch that isn’t to the top floor of the Sears Tower the a “Use my 10-20-30 rule for Power Point presentations – 10 slides Use for 20 minutes using 30-point fonts.” for a Even if you are profitable on paper and the cash doesn’t come in you will die – cash flow is everything in a Don’t improve an existing curve, create the next curve Don’t a Don’t let the bozos drive you down. They’ll tell you it can’t be done. Don’t listen. done. FINAL WORDS ON PLANS FINAL Professional & Class Sells in All Things! Plans are treated as they appear – Schlock get treated like Schlock and Professional with respect and good grades Plans revised less than three times are seldom good enough to receive an A in school or at work – F. Scott Fitzgerald rewrote The Great Gatsby 17 times and Hemingway rewrote the Old Man & the Sea 200 times (Nobel Prize) Suggestion: Lay it out, type it and then go back and fix it. First typing should forget details; complete all parts and pages and then retype it to make it flow; then finally retype it to make it professional via spelling, syntax, style and appearance POET’S LAMENT: Write drunk. Revise sober. “The only way of directly communicating an idea is by means of The an icon, and every indirect method of communicating an idea must depend for its establishment upon the use of an icon” must (Aunger 2002 The Electric Meme p. 232 WORDS FOR COMMUNICATIONS The adoption of new ideas takes time from Innovators (3%) to Laggards (16%). The lag time was 25 years in 1995, ten years in 2005 and will be five years in 2015- Ray Kurzweil. TABLE COMMUNICATIONS TABLE Communications = Words, #’s & Icons 1995 2005 2015 Adoption Timelines Adoption 25 years to adoption 10 years to adoption 5 years to adoption Adoption time of Idea Acceptance Between Early Adopters & Laggards 25 20 15 10 5 0 1995 2005 2015 New Product Acceptance & Personality Innovators (3%) & Early Adopters (13%) Buy First Innovators Adoption Speed of Ideas & Innovation in Years Rogers Diffusion of Innovation Laggards 16 Late Majority 8 Old and S ecurity Conscious O lder conservatives Educated followers who need validation 10 34 Early Majority 34% Early Adopters 13% Innovators 3% 1 0.3 5 Educated pioneers and opinion leaders Worldly & Venturesome Risk-Taking Entrepreneurs In Rogers Diffusion of Innovation the worldly risk-takers In buy first and the conservative surety types buy last buy Adoption of Ideas & New Products 35% 30% 25% 20% 15% 10% 5% 0% 3% Innovators Early Adopters Early Majority Late Majority Laggards 34% 34% Last to B uy 1st to B uy 16% 13% The lag time between when Early Adopters buy into new Ideas Ideas has fallen from 25 years in 1995 to ten years in 2005 and will drop to five years in 2015 and to 2.5 years in 2025 drop Elapsed Time Between Early Adopters & Late Adopters - Ray Kurzweil,The Singulariy is Near 2005, p. 338 25 20 15 10 5 0 1995 2005 2015 2025 Acceptance of ideas is Becoming faster and faster Stages of New Product Acceptance Stages Stages of Adoption Fear & Risk-Avoidance Dominates Stage One Stage Playground of preeminent visionaries Innovators 99% of the world laughs – Innovators Cars took 55 yrs to 25% market penetration Stage Two Stage Rejection & Fear Prevails in Masses 2% Adopt the New Early Adopters 97% of a cohort spurn the new – Early Buy-In-Rate Buy-In-Rate 1% Buy New Ideas 1% Phones took 35 yrs for ¼ to adopt; TV took 26 yrs for ¼ adoption Phones Stage Three Risk Mitigated-All Opportunity Ceases 84% Adopt the new Stage 84% Late Adopters Fear wanes and masses buy in except laggards Late All but 16% finally adopt anything new or original – Sales innovators make All buyers fear missing opportunity if they don’t buy in early! buyers The lag time between Early Adoption has fallen from 25 yrs in 1995 to 10 in 2005; will be five years in 2015 and 2.5 yrs in 2025 1995 New Market Penetration Strategy – Idea Acceptance & Change are Related Idea Individuals in California, Florida, Texas, Washington, Arizona Individuals and Colorado rank #1 in new product acceptance and Colorado Why? Their people are Change Masters and see the new as titillating Their Traditionalists in East and Midwest find the new threatening At CEC the stores in transient markets grew fastest Shakey’s Pizza and Jack in the Box withdrew from the East and Shakey’s Midwest due to slow and high cost of acceptance Midwest Law of Comparability – The Decoy Effect Law Predictably Irrational, Dan Ariely (2008) “We can improve our decision-making once we understand we We are predictably irrational – we seldom make the best choice since we tend to take the middle ground.” since William-Sonoma bread makers didn’t sell at all at $275 until William-Sonoma they offered a comparable choice at $395; then they really sold. they FREE is a magical word in marketing anything including FREE yourself. Lawyers will not help the indigent for a reduced rate but for nothing they do it all the time – Biz or Social? but Free often leads consumers to make erroneous buying decisions Choosing between a Free Amazon $10 gift certificate or a $20 gift certificate for $7 – most people opt for the FREE offer when the most logical and economic viable is the second. the Differentiate or Die in Mass Consumer Marketing Differentiate Howard Shultz at Starbucks offered coffee like Dunkin Donuts Dunkin sold Small, Medium & Large coffees Starbucks offered Short, Tall, Grande & Venti coffees labeled: Starbucks Caffé Amerciano, Caffe Misto, Machiato, Frappaccino. Caffé Law of Comparability Prevails in Minds of Consumers; the Law perception of a deal prevails even when it isn’t the ideal choice perception Supply & Demand is invalid due to irrational predictability, Swiss Supply Truffles priced at .15 (73% sell); Hershey Kisses at .01 (27% sell) Truffles Drop the price of Truffles to .01 and make Kisses Free Drop Sales of Kisses jumps to 69% & Truffles drops to 31% Sales The word FREE is Magical is Marketing World! The FREE “The most expensive sex is free sex” – Woody Allen – Touché Presentations Must be Interesting & Succinct Presentations Being nervous is good. It makes you try harder and be better! Brevity is Godly! Each Power Point slide should take no more than 30 seconds The 30 seconds is insufficient for success if not pared down from 2-5 minutes of information and knowledge on topic Real life stories with icons or graphic illustrations as metaphors make your point simply and effectively – people think in images not words Use bullets for recall of the info from your job or experience Reading material is absolutely verboten Grading Points on Your Class Presentations Image & Style is Everything -90% of Effectiveness ∆Know more than you say and you’ll be comfortable saying it ∆Connect with the audience via eye contact and verbal expression that is appropriate for the material and the moment ∆Get excited or the audience won’t – enthusiasm is contagious ∆Connect with the audience by establishing context and content ∆Connect by being appropriately correct – spelling, facts, syntax, etc. ∆Material must flow – beginning to end – Purposeful Structure ∆Use graphic examples or metaphors to emphasize points ∆Must be professionally delivered and professionally prepared to be eligible for a professional grade Using the past to predict the future is akin Using the past to predict the future is akin To driving forward using the rear­view mirror Dreams are more valid for new business Launches than yesterday’s realities! ...
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This note was uploaded on 01/30/2011 for the course MKT 5815 taught by Professor Kest during the Spring '10 term at Hodges University.

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