marketing & financial plan

marketing & financial plan - Marketing &...

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Unformatted text preview: Marketing & Financial plan for Windmills & Solar system in Lebanon Marketing Presented by Rami C. Dirani To To Professor Sharon Ann Wulf PhD Professor Cambridge College Cambridge, Massachusetts December 2009 Marketing Plan 1|Page Marketing Strategy Green Lebanon is the company that is going to be running this business. It will be known Green as nature friendly and its ambition is to minimize the air pollution in Lebanon by offering as alternative solutions in producing electrical power through the use of natural power like wind alternative and sunlight instead of using oil fuel and extracting CO2 into the atmosphere. and Presently, competition is minimal. In the solar system domain there are about 34 Solar Thermal Suppliers & Manufacturers in Lebanon as per the market survey conducted by Thermal Lebanese Center for Energy Conservation Project (LCECP) between on May & June 2008. For Lebanese the windmills there is no competition even though some individuals have installed such the machinery in their farms for personal use. An owner of a small business was studying in Sweden machinery his engineering degree. When he came back to Lebanon he imported a huge windmill and his installed it on his own. In a recent conversation with him in the summer of 2009 he told me that installed he had a difficult time when ordering the product from Sweden with shipment fees, taxes, etc. he Also he couldn’t install it so he was forced to get engineers from Sweden and Japan. He had to Also pay their travel expenses and a charge of $500 per day to help him in the installation process and pay operation. Still if there are any problems with the windmills there is no service available in operation. Lebanon. Lebanon. I can consider the electrical generator suppliers as my biggest competitors, but the gap is obvious between the two businesses. In a time where the trend is shifting toward a healthier obvious environment there is no chance of machines damaging nature by producing CO2 comparing to environment machines that can give the same performance with less cost and produce zero pollution. machines 2|Page The product installation is complicated and needs specialized engineers and technology, but once installed it becomes easy to use and operate. The advantages of these machines is that it but doesn’t need any kind of fuel oil. The energy can be produced from the wind power and the sun doesn’t light. A combination of solar system and windmills is the best type of energy. On a windy day light. the windmills will be doing the job and in a sunny calm day the solar system will take over the the same job. The healthy benefits of such combination compared with the unwell of generators is same shown in table 3.1 Windmills & Solar System Windmills Electrical Generators Wind Power Wind Oil Fuel (fuel price is ever-increasing) Oil Free of air pollution Free air CO2 gas in the air CO2 No sound pollution (quiet) No (quiet) Noisy Environmentally friendly Harm the environment and nature Beautiful shapes and dirt free Ugly. Need special spaces, and unclean -Table 3.1- Windmills & Solar System v/s Electrical generators benefits Windmills The distinction is obvious. While the world is going green many companies are promoting for a healthier environment and some governments are supporting these initiatives. promoting Interested companies in such plans will be fascinated by the benefits of this technology, and Interested from previous experience at one of the biggest manufacturing companies in Lebanon and the from middle east, “INDEVCO”, such companies are looking to help the environment and give back to middle society by reducing the amount of toxic pollution produced by them in order to have a bright society image in the market and be able to grab more customers. I believe that such companies will be image very interested in windmills and solar system and they are willing to shift from highly polluted very electrical generators to healthy power and save money in the long run. electrical 3|Page Marketing Tactics Marketing My target market is divided into 4 sections: 1- manufacturing companies, 2municipalities, 3-government agencies and organizations and 4- individual customers and municipalities, households. households. 5% 5% 30% 60% 1st Sector 2nd Sector 3rd Sector 4th Sector 60% of the market concentration will be on the first sector, because they are the most powerful and potential sector, they have the money to invest in new technology and they lokk powerful forward to implement it so they can profit better on the long run through minimizing the fuel forward consumption near zero, and improving their image in the society. the second biggest sector will be the municipalities, especially those who are far away the from the capital and who exist in geographic areas where the wind power is typical for such from technology, and the lack of electricity in those municipalities is obvious, 6 hours of electricity technology, power is provided by the government and the rest is offered by generators owned by the local power municipality or any individual person, and usually its not effective many problems occur and municipality operation prices are very high, thus the existence of windmills in such towns will be the solution operation 4|Page for the electricity power and more over if a municipality decide to invest heavily and so it can for generate electricity from the windmills more than her capacity of consumption, the rest of the generate power could be sold for neighbor towns and that could be a cash inflow to the town. power The 3rd sector is the government agencies and I really don’t rely on this sector because they may have their own electricity from the government for free, but some agencies exist in they small towns far from the capital and have the same problem as mentioned before in the small municipalities sector. municipalities The final sector is the household sector and any individual who is interested in following the trend of green power and feel committed to preserving the nature from more toxic and the pollution. In my first year I will choose to start with the first sector in my market, the biggest and In the most powerful one. If this sector can be penetrated successfully I will be able to survive in the the market and to expand to other sectors. This sector is the manufacturing companies existing in the Lebanon, because they have the money to invest and they have the willingness to use this Lebanon, technology. I’ve chosen to communicate with this sector through direct marketing techniques. I need I’ve to set up meetings with the influential people in the companies, accompanied by the group of to engineers who will be presenting the product features to let the clients know why they have to engineers invest in our products and what the benefits are related to the cost of fuel and being invest environmentally friendly as shown previously in table 3.1. The cost of one windmill turbine could vary from thousands of dollars to a few million The dollars. Hence serious companies that are interested in the product will have to invest many dollars. millions of dollars in such a plan. Therefore a highly professional and technical product millions presentation should be offered to the clients including all figures and numbers and benefits of the presentation 5|Page product. Companies will not invest millions in a product that was marketed on billboards or seen product. on an Ad on a local TV network. We will need to go into many meetings and make many on presentations. The process will be long and customers will ask for more information. As a presentations. marketing team we should be prepared for any requests by the client. They will most likely be marketing doing their own research and it will take time to have their response whether they would like to doing invest in our product. invest A secondary marketing tactic will be used. This is a TV advertisement which will air half hour before the 8:00 pm news. More than 80% of the Lebanese population will be sitting air in front of their TVs waiting for the news. A 30 minute clip will introduce the company to the in audience, its mission, values and the product benefits. They will be made aware of the pollution audience, created by the electrical generators and its effect on their health, their children, their nature and created their beloved country and stimulating there mind to start thinking green and encouraging them to their shift their demand for healthy power. My company will be supporting many NGOs concerned with protecting nature and the My environment similar to “Green Peace,” the well known independent global campaigning environment organization that acts to change attitudes and behavior, to protect and conserve the environment organization and to promote peace. Supporting such NGOs to help change the minds of the people by putting and pressure on governments and companies will be helpful for us because people will be more pressure aware of the danger that comes from toxic chemicals in our environment that threaten our rivers aware and lakes, our air, land, and oceans, and ultimately ourselves and our future. As a result and communities will start looking for healthier solutions that we as a company can offer. That kind communities of indirect marketing will be very supportive on the long run; it will take time to change of people’s mind and opinions and to make that campaign effective. people’s 6|Page Meanwhile, we can put some advertising materials on TV that support the Green Peace Meanwhile, campaign and other campaigns against global warming and air pollution. We can start campaign introducing small spots in the ad showing solutions by using more green energy machines than introducing oil-run machines. This is an indirect marketing campaign that will have a slow impact on the oil-run sales in the short term but it will prepare the market on the long run to be able and willing to sales demand our supplies. Moreover, after having done some business with customers, advertisements on TV will Moreover, include customers speaking about their experiences with our company after using the product include and speaking on the benefits that they gained, their satisfaction and the way they feel and comfortable in diminishing the global warming and air pollution. comfortable Pricing Being the first company to install windmills in the Lebanese market, our prices cannot be compared with any historical pricing trend in the region. But pricing will be compared with the compared prices offered by foreign companies that sell the same product. Knowing that we are not able to prices manufacture the windmill turbines nor install them, our company will be outsourcing those two manufacture tasks to a foreign company that will be our main supplier such as like Siemens (Sweden), tasks Aermotor Windmill Company (USA), and many others. Aermotor Our main job will be to sell the clients the product. Our suppliers will install it, launch it and make sure it operates effectively, and our company will be handling the rest as the and maintenance support, services, parts repair, etc. But the clients will find a difference in the prices because we’re going to be able to But negotiate with our suppliers on better prices, sales discounts. We will be able to offer our client negotiate 7|Page the product with lower prices and more services then the foreign companies, so prices may be the lower by 10% from the original price offered by the mother company. lower Increasing prices by 10% will make our prices same as the manufacturers, but still the client will purchase the product from us because we are offering more services like 24/7 free client service for the first 3 years. An increase in 20 % or more will harm the company sales and will service drive the client to look for other suppliers. Possibly other investors will take advantage of our drive high prices and enter the business with lower prices. high Decreasing prices by 10 % or more will not be effective for us because we are not the company that manufactures the product, so we cannot control pricing. The 10% could be our company profit from the business so if we decreased prices by 10% that means we are going to be doing profit business without profit and the company will not be able to survive with no profit. So this business strategy will not be used at least for the first 5 years. After 5 years, if the company is growing strategy and making good profit we can decrease prices upon the market demands. and The green energy business is expanding and more and more the competition is becoming serious. New companies and manufacturers are entering this business, and prices are declining serious. slowly. The trend for the future is that prices will be lower than the present. slowly. So in the present time we will be offering some sales discounts for big customers. If a customer is willing to buy 10 windmills we’re going to offer a good deal and a higher rate of customer discount than a customer who is buying only 1 windmill. Also credit on sales will be given for discount 180 days. Upon purchase, the customer will have to sign a contract and pay 35% of the total 180 price and will be able to pay the rest in 180 days. Warranty is for 3 years beginning the day of price installation of the equipment and free services will be offered for the first year 24/7. installation 8|Page Marketing Communications Marketing Communication is always one of the most important and vital strategic areas of an organization's success. Two of the main marketing communication tools and the core of the organization's marketing plan are the public relations and the personal selling. As mentioned before, the marketing product we are selling is expensive and the customer needs to have full information about it. The product customer needs to feel safe in order to invest large amounts of money to buy the product. The customer best marketing communication tool is using a mix of public relations and personal selling. best Public relations will help us to introduce our company to important clients. Through our network with the community; we will be helping many NGOs to fight for their rights and for the network sake of humanity and living in a healthy environment. Once introduced to the market with the sake bright image of being environmentally friendly it will become easy for our company to have bright contact with clients and then we will be using the direct selling process through a team of contact technical engineers who will have to explain to the customer technical features of the product technical such as: how much electrical power each turbine will generate, where is the best place in the such company to install it, how much will be needed to replace all the generators available and be self company sufficient, and if it is feasible to install it in this area where the company exist. sufficient, All this technical information is important for a client to know and he cannot get it through other communication tools, like publicity in a newspaper or a magazine or on billboards. through The marketing team will contain sales people who will be able to negotiate prices and terms of The payment and special discounts. payment During the first year $100,000.00 will be spent on the marketing plan. It will be enough for the first year. Some of this money will go for the NGO like Green Peace and the other will for 9|Page be used for advertisement. In the next years the amount of money used will be a percentage of be sales. I believe the more your sales increase the more you will need to spend on advertisement. Financial Plan Financial Financial assumptions 1- The trend today in the business market is toward a healthier environment, using machines that generate the minimum amount of pollution in the air. Cars are shifting machines to hybrid and manufacturers being the highest producers of air pollution must follow to this trend to be on the safe side, to maintain their image in the market and to be able this to grab new customers. Electrical generators produce a large amount of the pollution to if not the largest, thus companies are seeking to get rid of those heavy polluting if machines and to install machines that are environmentally friendly. machines 2- The fuel reserve in the world will last for another 80 years maximum, and after 80 year we will have no fuel to use thus all the machines that used to run on fuel will year 10 | P a g e become useless, so the clever manufacturers will not wait until that time to exchange become their generators, they will start this act as soon as they can. their 3- The business sector is growing promptly in Lebanon, foreign investors are reinvesting their money after the independence in 2005. reinvesting 4- Clients will buy our product because there are no similar companies that offer the same product in Lebanon, and if they buy from foreign companies they will not same receive the same quality of services offered by our company, such as 24/7 service, receive one year free services, 3 years warranty. one 5- I assume that my energy is legitimately more cost effective than other energy that maybe a solution for the pollution and I mean the bio-fuel which seems until now maybe impossible to get it easy because of its high cost of production. impossible The oil price will be mostly monitored; it is easy to get numbers about oil prices in the market daily, the more the price of oil fuel is increasing the more the companies will be serious market in shifting into green power and I believe that oil prices will always increase according to the in law of demand because demand is increasing and supply is decreasing. law The competition is another key that will be monitored so if any company is planning to get in the business we have to be alerted quickly and be prepared for the competition. get Many changes could occur to the plan if one of the assumptions will not be realized, but the first one is commonly true because all the people are aware of the global warming and no the debate can be made if we should change to a healthier free polluted environment. The other debate assumption about the fuel extended life, it may take more than 80 years to run out of oil fuel this assumption 11 | P a g e may be caused by shifting the energy consumption into green energy and other fuels like biomay fuel or any new invented chemical fuel. Return on investment is an indicator of how profitable a company is relative to its total assets, thus I assume that all the assets that our company will be using is to facilitate the assets, existence of the company and the operation process, like building, computers, vehicles etc. I existence mean the product we are selling will not be purchased on our account and be introduced in our mean balance sheet as an asset; once the client signs a contract to install a windmill then we will order balance the product from our suppliers. For the AR and collection of notes payable, given the discount rate that we offer to our For clients and the 180 credit to pay the rest of the money, some problem may occur with the client clients he may lack cash in some point of time because of other investment in other areas or fields so we he may give him more time to pay back the money and we may charge him interest. may Research and development costs will be very little, because we are not the company that produces the product so we are not related in developing the product, but we will have some produces R&D concerning new customers and potential competitors. R&D Selling expenses will vary from customer to another, one customer he may demand more information and take more time to decide then others, that means more follow up, and we may information conduct many meetings in order to convince him and the expenses for this sales accomplishment conduct will be higher. Marketing expenses will be increasing constantly, because I believe the more you want to Marketing be existing in the market and brand known the more you have to invest in marketing, and the be more you sell product the more you have to market, you cannot reach a high point in marketing more and pull out of it because competitors may take advantage of that and hit the ground. and 12 | P a g e For the first year to run the operation the company need a capital investment of $145,050 For as an operation expenses for the first 3 months before we start selling for the first customer and as getting money in return, (See Income statement) the first year projected total expenses will be getting $476,700. In the next year of the business 50% of the first year profit will be reinvested in the $476,700. company growth and expansion and 50% of the profit will be given to investors. So the business company will be running itself and no need for external investment. will We will always as a company tries to keep our debt very low, but for the first year we may have a lack of investors who will finance the operation so we may take a loan from a bank may to be able to operate, thus the debt/equity ratio should not exceed the 25%. to If sales projections were missed by 20% for the 1st quarter we will need nothing because already we assumed that the 1st quarter we will have no sales and the time will be spent to already contact clients and prepare for sale. And for the last of the year we will be able to maintain a contact profit under 20% of sales drop (see Income statement, sales less by 20%). profit If the costs were extended by 20% we can still make a 10% profit because our profit margin is set to be 30%, that means we get the product from our suppliers for a price of X and margin we sell it for X+30%, so an increase in the product price by 20% will affect us as company but we for the first year we will not increase the product prices, the customer will pay the same as it was for before but with time we will be increasing the prices slowly. before Expected rate of return for the next 2 years is 35%, and for the next 5 years it should increase to reach 45%. increase 13 | P a g e Start-Up Expenses (All numbers are in US $) (All Start up expenses Equipement Computers Software Internet Provider Telephone Q1 Q2 Q3 Q4 Annual Total 20000 10000 500 1000 1000 250 500 1000 1000 250 500 1000 1000 250 500 1000 53000 10750 2000 4000 14 | P a g e Car Car Furniture Facilities Rent Supplies Stationery Stationery Fees and other costs License Insurance Advertising Cash reserves Salaries Salaries Operating costs Training costs 150000 15000 5000 0 5000 0 5000 0 165000 15000 15000 15000 15000 15000 60000 500 500 250 250 250 1250 15000 5000 25000 0 5000 25000 0 5000 25000 0 5000 25000 15000 20000 100000 35000 35000 50000 15000 35000 50000 15000 35000 50000 15000 35000 50000 15000 140000 200000 60000 Income Statement Income Jan Feb Mar Apr May Jun Jul $250,000.0 0 $175,000.0 0 $300,000.0 0 $210,000.0 0 $400,000.0 0 $280,000.0 0 $500,0 $150,0 Income Net Sales Cost of Goods Gross profit $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $350,0 $0.00 $0.00 $0.00 $75,000.00 $90,000.00 $120,000.0 0 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $50 $17,500.00 $25,000.00 $7,500.00 $500.00 $7,500.00 $500.00 $7,500.00 $500.00 $7,500.00 $500.00 $7,500.00 $500.00 $7,50 $50 $5,000.00 $1,500.00 $5,000.00 $1,500.00 $5,000.00 $1,500.00 $5,000.00 $1,500.00 $5,000.00 $1,500.00 $5,000.00 $1,500.00 $5,00 $1,50 $625.00 $125.00 $625.00 $125.00 $625.00 $125.00 $625.00 $125.00 $625.00 $125.00 $625.00 $125.00 $62 $12 $11,666.67 $933.33 $11,666.67 $933.33 $11,666.67 $933.33 $11,666.67 $933.33 $11,666.67 $933.33 $11,666.67 $933.33 $11,66 $93 $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,00 General Expenses Telephone Marketing office supply Rent inssurance Depreciation Maintenance Salries Payroll Taxes Trainings 15 | P a g e petty cash $1,500.00 $1,500.00 $1,500.00 $1,500.00 $1,500.00 $1,500.00 $1,50 fuel for cars/trucks $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,00 Total expenses $71,350.00 $36,850.00 $36,850.00 $36,850.00 $36,850.00 $36,850.00 $36,85 NIBT $71,350.00 $36,850.00 $36,850.00 $38,150.00 $53,150.00 $83,150.00 Taxes (10%) -$7,135.00 -$3,685.00 -$3,685.00 $3,815.00 $5,315.00 $8,315.00 NIAT $64,215.00 $33,165.00 $33,165.00 $113,1 $11,31 $101,8 $34,335.00 $47,835.00 $74,835.00 16 | P a g e ...
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This note was uploaded on 05/30/2011 for the course BUS 515 taught by Professor Blossom during the Spring '10 term at Strayer.

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