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Adventure Travel International (ATI) — Sample Plan

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Table of Contents

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1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2.0 Situation Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Market Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1.1 Market Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1.2 Market Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

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2.1.3 Market Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1.4 Market Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 SWOT Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2.1 Strengths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

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2.2.2 Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2.3 Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2.4 Threats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3 Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4 Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.5 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.6 Critical Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

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2.7 Macroenvironment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

3.0 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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3.2 Marketing Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Financial Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.4 Target Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.5 Positioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.6 Strategy Pyramids . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.7 Marketing Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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3.7.1 Services and Service Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.7.2 Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.7.3 Promotion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.8 Marketing Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

4.0 Financials, Budgets, and Forecasts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.1 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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4.2 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.2.1 Sales by Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.3 Expense Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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4.3.1 Expenses by Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.4 Linking Sales and Expenses to Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.5 Contribution Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

5.0 Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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5.1 Implementation Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.2 Marketing Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.3 Contingency Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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Adventure Travel Int'l. -- Sample Plan

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1.0 Executive Summary

Adventure Travel International (ATI) will begin operations in September, 1999 and provide
adventure, sport/travel packages to people in the Pacific Northwest, specifically the greater
Woodville area. The founders and employees of ATI are experienced travel-industry
professionals and passionate about the activities ATI will promote and offer.

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An opportunity for ATI's success exists because the national tourism and travel industry is
growing 4% and adventure travel 10% annually. Further, the Woodville adventure travel
market is growing at least 12% annually and has no providers who specialize solely in

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adventure travel. ATI is poised to take advantage of this growth and lack of competition with
an experienced staff, excellent location, and effective management and marketing. The
Woodville area, like much of the Pacific Northwest, has a large concentration of outdoor
recreation enthusiasts. These health-conscious individuals, couples, and groups interested in
popular adventure sports, such as skiing, kayaking, trekking, etc., are ATI's primary
customers. ATI's target market is an exploitable niche and ATI will provide a specialized and

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thus differentiated service. Prices will be competitive with the remainder of the market. The
company's estimated sales for the first year of operations is $534,607, increasing 10%
annually for the next two years.

2.0 Situation Analysis
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According to the Department of Commerce, the U.S. travel and tourism industry is the
nation's third largest retail industry and will be number one by the year 2000. Revenues from
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travel have increased approximately 100% in the last decade with U.S. travel agencies
producing over $100 billion in revenues each year. Adventure travel, a segment of the travel
and tourism industry, is growing at least 10% per year. More than 50% of the U.S. adult
traveling population, or 147 million people, have taken an adventure trip in their lifetime, 98
million in the past five years. Thirty-one million adults have engaged in hard adventure
activities like whitewater rafting, scuba diving, and mountain biking. An additional 25 million
engaged in both a hard- and soft-adventure activity. Activities most commonly participated in
during adventure vacations: camping (85%), hiking (74%), skiing (51%), snorkeling or
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scuba diving (30%), sailing (26%), kayaking or whitewater rafting (24%), and biking trips
(24%).
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Customers tend to be young and affluent, ages 18-34, and one fourth are from households
with annual incomes of $75,000 or more. In addition, statistics show that 8,000 U.S.
companies offered adventure packages that generated $7 billion in 1997. There was a 66%
increase in executive participation in adventure travel between 1992 and 1996. California
holds the largest population of adventure travelers, who tend to live in urban areas. ATI will
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be located in an urban area within the state of California. In addition, it will be the only
adventure travel agency in an area with 300,000 people and a large concentration of outdoor
recreation enthusiasts and customers who match ATI's target profile.
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Planning an adventure trip requires knowledge of the travel industry and popular adventure
sport destinations, as well as adventure travel activities. Adventure travel customers are a
specialty group. These are primarily young professionals who often lack the time and
experience necessary to effectively plan an adventure trip on their own. ATI will communicate
its ability to meet the demands of this market and fill this need.
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2.1 Market Summary

The travel and tourism market is separated into two main categories, business and leisure
travel. Each contribute about 45% to total revenues. The remainder of revenues are
generated from combined business/leisure trips. The market is further separated into
domestic and international travel. Domestic travel accounts for approximately 70% of

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industry revenues. Business travel can be divided into two categories, the medium to large
corporate account, and the small independent businessman. Leisure travelers are classified
according to the types of trips they take, income, or age. The four primary leisure travel
groups are:

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1. Adventure, Special-Interest, R&R, Honeymoons & Sightseeing Trips.
2. High-Income Travelers.
3. Budget-Conscious Travelers.
4. Families, Students & Seniors.

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Adventure travel generates approximately $15 billion of the approximately $100 billion-dollar
annual industry revenues. Approximately $2-4 billion of these revenues come from California
adventure travelers. Based on these and other figures, ATI estimates the Woodville
adventure travel market to be approximately $6 million annually. ATI estimates that it will
capture about 8% of this market. nP
Target Markets
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National Adventure Travelers
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Woodville Adventure Travelers
Internet
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Table: Market Analysis

Market Analysis
Potential Customers Growth 2004 2005 2006 2007 2008 CAGR
National Adventure
10% 9,000,000 9,900,000 10,890,000 11,979,000 13,176,900 10.00%
Travelers
Woodville Adventure
15% 100,000 115,000 132,250 152,088 174,901 15.00%
Travelers

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Internet 20% 3,000,000 3,600,000 4,320,000 5,184,000 6,220,800 20.00%
Total 12.78% 12,100,000 13,615,000 15,342,250 17,315,088 19,572,601 12.78%

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2.1.1 Market Demographics

Adventure travel falls primarily under the leisure travel category. Revenues from leisure
travel earned by U.S. travel agencies exceed $50 billion annually. Adventure travel is a sub-
category of leisure travel and can be further broken down into hard and soft adventure travel.
Both hard and soft adventures involve physical, athletic activities. Hard adventure activities,

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as the name suggests, generally involve risk and require substantial athletic competence.
Soft adventure activities are less physically demanding and more passive than their hard
adventure counterparts.
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Adventure travelers are slightly more likely to be men age 18-34. However an increasing
number of adventure travelers are women (some statistics suggest that women comprise
49% of the adventure market). Men on average spend more than women on their adventure
travels. ATI's primary customers are married couples, ages 25-35, with children and
household incomes over $50,000. ATI will be located in the heart of the Pacific Northwest.
The natural beauty and abundance of outdoor activities attract many fitness oriented
individuals. Per capita, the area has more people than any other in the nation who actively
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participate in mountain and water sports, such as skiing, climbing, kayaking, whitewater
rafting, mountain biking, etc. These are the people in ATI's target market. ATI will focus on
the sale and promotion of adventure travel primarily to individuals, but also to corporate
clients in the Woodville area.
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2.1.2 Market Needs

Adventure travel activities are a specialized product, and first-hand knowledge of these
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activities is necessary in order to effectively promote and sell them. Many potential customers
are unsure of the location they wish to reach. Part of the value associated with travel
agencies is the knowledge they possess about destinations. Customers look to the agency to
provide them with sound advice for a competitive price. ATI is confident in its ability to do so.
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ATI can save the customer time and money, and help to ensure that they are satisfied with
their vacation.
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2.1.3 Market Trends

One notable trend in the travel industry is increased deregulation. Deregulation has increased
competition and the need for differentiation. In many cases, the prices of airfare and other
travel-related services has dropped. Additional trends include caps on agency commissions by
many of the larger airlines, increases in adventure travel, and reduction of profit margins.

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More than 50% of the U.S. adult traveling population, or 147 million people, have taken an
adventure trip in their lifetime, 98 million in the past five years. Approximately 31 million
adults have engaged in hard adventure activities like whitewater rafting, scuba diving and
mountain biking. An additional 25 million engaged in both a hard and soft adventure activity.

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The growth trend in adventure travel is predicted to continue.

Market Forecast

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14,000,000

12,000,000
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10,000,000

8,000,000 National Adventure Travelers
Woodville Adventure Travelers
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6,000,000
Internet
4,000,000

2,000,000

0
2004 2005 2006 2007 2008
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2.1.4 Market Growth

The travel industry is growing. Reasons for this growth include a healthy domestic economy
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and devaluation of currency in other regions which has made travel less expensive for U.S.
residents. Leisure travel increased by 3.2% in 1997 and 2.0% in 1998. The healthy economy
has increased business which in turn boosted domestic business travel 4.8% in 1997 and
3.6% in 1998. Adventure travel, growing 10% annually, is one of the fastest growing
segments of the travel industry. Statistics show that 8,000 U.S. companies offered adventure
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packages that generated $7 billion in 1997. There also has been a 66% increase in executive
participation in adventure travel between 1992 and 1996.
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Target Market Growth

20.00%
15.00%

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10.00%
5.00%
0.00%

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2.2 SWOT Analysis
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In the following four sections are the most relevant issues to ATI's successful operation. ATI's
strengths include its management, experienced staff, marketing savvy, and targeted focus.
ATI will capitalize on these, and other strengths, to take advantage of opportunities and
manage threats. Firm weaknesses are primarily those inherent in a start-up venture and are
discussed in one of the following sections.
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2.2.1 Strengths
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• MANAGEMENT: ATI's manager has a successful record in this industry. His experience
and the network of valuable connections he has developed will contribute greatly to
ATI's success.
• LOCATION: ATI will be ideally located. The Pacific Northwest is a mecca for people
who meet ATI's target audience profile. In addition, Woodville is located 45 miles from
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the coast and less than two hours from the mountains. Five rivers are within a two-
hour drive. These geographic features will continue to attract potential customers.
• EXPERIENCED STAFF: The ATI team is experienced in the travel business and in
adventure sports. All members have over five years experience. Moreover, they are
willing to sacrifice extra time and effort to build a successful business. Along with the
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intangible benefits derived from succeeding in an independent endeavor, ATI will offer
profit sharing and potential partnership opportunities to its ground-floor members.
• POPULARITY OF ADVENTURE TRAVEL: Adventure activities are very popular, and ATI
is betting that the popularity will continue to grow. Many of the adventure sports, such
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as kayaking, mountainbiking, alpine and rock climbing, have had a kind of cult
following for many years. However, in the last five years, these sports have started to
go mainstream.

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2.2.2 Weaknesses

• START-UP STATUS: ATI is a start-up and the odds are stacked against small start-up
companies.
• LIMITED PERSONNEL: Though ATI's staff is exceptional, they will be faced with long
hours for little pay during the first two years of operation.

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• FINANCING: Preliminary estimates of sales and expenditures suggest that ATI will
remain financially stable. However, unforeseen expenditures or poor sales will
threaten ATI's cash position, which will be particularly vulnerable in year one.

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2.2.3 Opportunities

• GROWTH MARKET: The national adventure travel market is growing 10% annually,
and preliminary estimates suggest that the Woodville market exceeds that growth

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rate.
• POTENTIAL TO ACHIEVE SALES FROM THE NATIONAL MARKET: As ATI establishes
itself and gains financial stability, it can begin to market its services nationally. ATI
plans to begin this effort via a World Wide Web campaign in the first year of operation
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and diversify its communications efforts in years two and three.
• POTENTIAL TO BECOME A PREMIER PROVIDER: ATI has the management and staff to
produce a top-quality service.
• VERTICAL INTEGRATION: The potential to integrate services and add branches exists.
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2.2.4 Threats

• INTERNET AND PRICE COMPETITION: When the airlines were deregulated, price
competition increased. Further, the Internet has provided a sales medium for
consolidators who compete on price and has also given consumers the ability to plan
and arrange trips for themselves. Thus, the traditional agency faces greater
competition.
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• LOCAL COMPETITION (EXISTING AND POTENTIAL): There are no agencies in the
Woodville area that specialize solely in adventure travel. However, any one of the
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approximately 30 can book an adventure trip. Moreover, additional adventure travel
specialists may follow ATI's lead.
• ECONOMIC DOWNTURN: The strong domestic economy has been good for the travel
and tourism industry. Continued growth is anticipated. However, unforeseen or
unanticipated economic recession would reduce disposable income and threaten ATI's
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sales.
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2.3 Competition

In the travel industry, as in other industries, there are large national chains, small home-
based businesses, consolidators on the Internet, etc. Membership numbers of travel-related
associations give some indication of the number of participants in this market. The American
Society of Travel Agents (ASTA) reports 25,000 members in 135 countries, most of whom are

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small businesses. The Association of Retail Travel Agencies (ARTA) has another 3,000
members. In addition, there are many agencies not affiliated with these associations but with
one or more of the approximately 35 travel-industry organizations in the country. ATI has
approximately 30 immediate competitors in the greater Woodville area, including two

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agencies that are branches of national travel agency chains. Direct national competitors
include:

1. Rollins & Hayes: Based on the east coast, Rollins & Hayes is the most well known and

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respected adventure travel agency in the world. They have provided adventure travel
packages for over 20 years and have successfully integrated travel agency services
and adventure travel activities. This offers them complete control over the entire
vacation. They have the advantage of an established reputation, high-quality trips,

2.
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economies of scale, and strategic alliances. However, their packages are expensive
and appeal primarily to a high-income clientele.
Sundance Travel: Based in Colorado, Sundance is a traditional agency and has been in
business for 10 years. They have gradually made the move towards becoming
adventure travel specialists and are now recognized as such. Their strengths are
experience, reputation, and financial solvency. Weaknesses may include high
personnel and management turnover and the lack of a clear plan for future growth.
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3. Global Adventure Travel: Global was established in 1995 and has successfully
established themselves as adventure travel specialists. They are based in the Los
Angeles area. Global has done a good job positioning itself through successful
marketing communications and management. The Los Angeles area contains a large
adventure travel market. It is, however, a very competitive area.
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Competitor by Growth and Share
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Rollins & Hayes
Sundance
Global
Travel Northwest
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Woodville Travel
Other
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Table: Growth and Share Analysis

Growth and Share
Competitor Price Growth Rate Market Share
Rollins & Hayes $1,100 3% 23%
Sundance $975 5% 8%
Global $950 10% 7%
Travel Northwest $1,000 4% 1%

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Woodville Travel $965 0% 1%
Other $0 0% 0%

Average $831.67 3.67% 6.63%
Total $4,990.00 22.00% 39.80%

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2.4 Services

ATI is a full service agency and sells standard travel agency goods and services, including
airfare and travel packages. Additional services include assistance with passports, providing

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access to top-of-the-line equipment and supplies, and a superior offering that includes access
to better than average terrain and activities, accommodations, and entertainment. The value
added of ATI's offering is its knowledge and expertise, competitive rates, and specialty focus
on adventure travel, which translate into increased satisfaction for the customer.
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2.5 Keys to Success

• Effectively segment the travel market and target adventure travelers.
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• Successfully position ourselves as adventure travel specialists.
• Communicate the differentiation and quality of our offering through personal
interaction and media.
• Develop a repeat-business base of loyal customers.
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2.6 Critical Issues

• Market growth projections for the travel industry and for adventure travel are
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accurate.
• National economic conditions, which are favorable to the travel industry, will not
experience significant decline in the next five years.
• International conditions will remain favorable for service providers.
• Capability to produce effective, targeted communications that promote the benefits of
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adventure travel and ATI's specialty focus and services.
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2.7 Macroenvironment

• Disposable income is high but leisure time is limited and contested by other
responsibilities and recreation options.
• Due to a good economy, travel and tourism is growing.
• Population segments have different needs and wants. This requires effective target

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marketing.
• Internet sales threaten the traditional firm, and technological advances require
greater knowledge and sophistication in most industries.
• International conditions, which are favorable, greatly effect the industry. Political

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unrest, military action, and other issues determine availability to many foreign
destinations.

3.0 Marketing Strategy

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ATI believes that the goal of business is to create and keep customers. Its marketing strategy
will reflect this goal as it builds its reputation in the Woodville area. Though ATI operates in
the travel industry, it provides much more than travel. ATI provides adventure and freedom.
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Many of ATI's customers spend 50 weeks of the year in an office. ATI offers people the ability
to get away and remember how much they love the challenge and excitement of an athletic
endeavor. ATI will promote the benefits of adventure travel. These benefits include better
health, excitement, personal growth, ear-to-ear grins, and a whole lot of fun. ATI will also
promote the benefits of its services. These benefits include saving time and money, and
confidence in the vacation's success.
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3.1 Mission

Adventure Travel International (ATI) is a travel agency that specializes in adventure travel.
We provide consulting and custom travel arrangements and packages. ATI's mission is to
become the foremost provider of adventure travel to the people of the Pacific Northwest.
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ATI's employees and owner are outdoor adventure and travel enthusiasts, as well as
seasoned travel-industry professionals. ATI seeks to connect adventure travel newcomers
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and veterans with service providers, adventure activities, and accommodations that fit the
client's desires, budget, and skill level.
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3.2 Marketing Objectives

• Achieve an annual growth rate of at least 10%.
• Promote adventure activities through strategic alliances with health clubs, local
athletic organizations, and retailers.
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• By the end of year three, achieve 15% of sales through the Internet.
• Become the market leader of adventure travel in the Woodville area.
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3.3 Financial Objectives

• Generate sales of approximately $550,000 in year one and increase sales 10%
annually.
• Capture and maintain a gross margin of 18-20%.
• Achieve positive net worth by year two.

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3.4 Target Marketing

Sa
ATI will target the following groups:

• Couples and individual adventure travelers: This is the customer group that meets the
demographic profile for adventure travelers -- ages 25-35, married, with household
income greater than $50,000.

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• Group adventure travelers: These are groups that belong to local athletic
organizations, such as cycling or kayaking clubs.
• Corporate adventure travelers: ATI will target local businesses in an attempt to secure
corporate accounts. nP
ATI plans to focus its initial efforts on the adventure travel market in the greater Woodville
area. As ATI grows, marketing efforts will expand. The major purchasers that fit ATI's target
market are located in urban areas within these states:

1. California
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2. Florida
3. New York
4. Texas
5. Illinois
6. Nevada
7. Hawaii
8. New Jersey
9. Pennsylvania
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10. Georgia
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3.5 Positioning

For individual and corporate clients who wish to participate in adventure travel, ATI is the
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premier adventure travel agency in the Woodville area. ATI's experience with and enthusiasm
for adventure travel is displayed in the exceptional service, value, and advice it provides for
the customer.
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3.6 Strategy Pyramids

STRATEGY 1: Develop brand recognition through the use of effective advertising, marketing
communications and promotion.

Tactic: Develop a marketing mix designed to target the Woodville market.

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• Program: Print and electronic advertising campaign, using specialty publications and
local radio as primary media.
• Program: Use strategic alliances to conduct promotions and giveaways.

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Tactic: Expand brand recognition to the national market through increased industry
participation and WWW presence.

• Program: Utilize the networking benefits of industry associations, trade shows, and
publications.

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• Program: Develop and promote ATI's website. The availability of information and the
ability to schedule and purchase online will be beneficial to the customer and ATI.

STRATEGY 2: Increase revenues and reduce costs by establishing repeat and corporate
customers. nP
Tactic: Customer satisfaction program.

• Program: Focus ATI's efforts on customization of adventure travel and utilization of
its core competencies. ATI would rather recommend that a potential customer
purchase elsewhere than provide a trip outside of its expertise.
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• Program: Post purchase and post trip follow-up. Research indicates that the
communication between the firm and the customer after the sale positively influences
repeat purchase.

Tactic: Corporate account acquisition.

• Program: The corporate sales program will depend upon specialized literature and
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personal promotion. Corporate accounts generate recurring revenue and will help
diversify ATI's sources of income.
• Program: Corporate giveaway promotion. Trips will be awarded as prizes and will be
tin

promoted via local radio.

3.7 Marketing Mix
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ATI will employ a wide range of advertising communications and promotion to achieve its
marketing goals. Research on the demographics of ATI's target market suggest that the most
effective communications will come through advertising in several specialty publications and
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via local radio. In addition, direct interaction or promotion at health clubs, shopping malls,
sporting events, etc. will be part of ATI's marketing mix.
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Adventure Travel Int'l. -- Sample Plan

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3.7.1 Services and Service Marketing

ATI will sell standard travel agency goods and services including airfare and travel packages.
Additional services will include assistance with passports, providing access to top-of-the-line
equipment and supplies, and a superior offering that includes access to better than average
terrain and activities, accommodations, and entertainment. The value added of ATI's offering

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is its knowledge and expertise, competitive rates, and specialty focus on adventure travel,
which will translate into increased assurance and satisfaction for the customer. ATI's decision
to focus on adventure travel was made because economic indicators suggest that an
increased demand for adventure travel services exists, the Woodville area does not have a

Sa
true adventure travel specialist, and members of the ATI team are experienced and
enthusiastic about adventure travel activities. It is hoped that this enthusiasm will be
communicated to the customer, and ATI's experience will translate into satisfaction and
repeat business.

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3.7.2 Pricing

Much of ATI's pricing is determined by market standards. ATI will attempt to maintain
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margins of 10% on all airline travel. Margins on all other products and services vary
depending upon the provider but are expected to average 20%. ATI will make every effort to
maintain a competitive pricing policy. However, as ATI builds its reputation as the premier
provider of adventure travel, it expects to earn the ability to charge a premium for its
services.
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3.7.3 Promotion

During ATI's first year of operation, it will hold a grand opening and will organize and sponsor
several athletic events. Events will include, among others, an off-road triathlon, 10k race and
5k fun run, and a mountain-bike race. ATI will provide various travel packages and other
items as prizes. All ATI employees belong to local athletic clubs and will, through interaction
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with other members, promote ATI's services. During the grand opening and other events, ATI
will provide literature with information about trips and activities. Negotiations with area
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health clubs have begun and additional promotion will likely occur through these strategic
alliances. Specialty rather than large national publications will serve as media vehicles for ATI
advertising. Local radio stations will also be used. Personal selling will also occur, though
phone solicitation will be limited. ATI plans to occasionally station sales personnel in locations
around Woodville, such as shopping malls. ATI's goal is to develop personal familiarity
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between its employees and the community.
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3.8 Marketing Research

Ongoing industry analysis is conducted by several organizations, including the U.S.
Department of Commerce, and is available for sale. Research on the travel and tourism
industry will be purchased as necessary. Demographics and spending patterns of adventure
travelers have been secured and used to formulate communications strategy. ATI will conduct

m
customer surveys when a specific research problem is identified. ATI subscribes to several
industry publications and will attend trade shows to stay abreast of relevant issues.

Sa
4.0 Financials, Budgets, and Forecasts

ATI's marketing budget for year one of operations is taken from the start-up investment and
is equivalent to approximately 6% of anticipated first-year revenues. The marketing budget
will be evaluated quarterly, and at the end of year one, adjustments will be made to

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advertising schedules, media vehicles, effective frequency, etc. as necessary.

The following issues are relevant to ATI's marketing efforts:


nP
As a start-up, ATI has no baseline by which it can determine the effects of its
marketing efforts on sales. Year two marketing activities will benefit from the financial
results of year one operations.
• The marketing budget has been established based on anticipated revenues. ATI plans
to employ the use of more sophisticated budgeting methods as a baseline is
established.
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• Much of ATI's marketing efforts will involve personal interaction with customers in the
Woodville area. ATI must attempt to conserve resources when possible, especially in
the early stages of operation. Sweat equity in marketing and other activities will be
critical to ATI's success.

4.1 Break-even Analysis
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ATI's break-even analysis, including monthly sales break-even points, are located in the
tin

following table. Break-even calculations assume a 20% gross margin. ATI plans to improve
its margin by year three or four. The improved margin will come as the result of economies of
scale, strategic alliances, and ATI's position as a premier service provider. ATI will be able to
raise prices without affecting demand. Fixed costs may increase slightly over the next two
years.
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Adventure Travel Int'l. -- Sample Plan

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Break-even Analysis

$2,500
$2,000

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$1,500
$1,000
$500

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$0
($500)
($1,000)
($1,500)
$0 $1,900 $3,800 $5,700 $7,600 $9,500

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Monthly break-even point

Break-even point = where line intersects with 0
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Table: Break-even Analysis

Break-even Analysis:
Monthly Units Break-even 5
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Monthly Revenue Break-even $4,286

Assumptions:
Average Per-Unit Revenue $950.00
Average Per-Unit Variable Cost $617.50
Estimated Monthly Fixed Cost $1,500

4.2 Sales Forecast
g

Detailed projections are located in the sales forecast table. ATI expects sales to be slow in the
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first, and possibly second quarter of operation. Sales growth is estimated at 10% annually
through year three.
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Adventure Travel Int'l. -- Sample Plan

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Monthly Sales Forecast

$80,000

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$70,000

$60,000

$50,000 Woodville Market (Individual)

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$40,000 National Market
Internet
$30,000
Corporate Market
$20,000

$10,000

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$0
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
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Table: Sales Forecast

Sales Forecast
Sales 2005 2006 2007 2008 2009
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Woodville Market (Individual) $427,685 $382,245 $258,751 $284,626 $313,089
National Market $42,768 $70,568 $97,032 $106,735 $117,409
Internet $10,693 $47,046 $97,032 $106,735 $117,409
Corporate Market $53,461 $88,210 $194,063 $213,469 $234,816
Total Sales $534,607 $588,069 $646,878 $711,566 $782,722

Direct Cost of Sales 2005 2006 2007 2008 2009
Woodville Market (Individual) $342,148 $301,974 $199,238 $219,162 $241,078
National Market $34,214 $55,749 $74,715 $82,186 $90,405
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Internet $8,554 $37,166 $74,715 $82,186 $90,405
Corporate Market $42,769 $69,686 $149,429 $164,371 $180,808
Subtotal Direct Cost of Sales $427,686 $464,575 $498,096 $547,906 $602,696
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4.2.1 Sales by Manager

ATI anticipates that the majority of revenues, 75-80% will come from individual customers in
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the Woodville area. This is especially true in the first two years of operation. The remainder of
revenues will come from corporate clients and national customers who purchase via the
Internet. By year three, ATI hopes to capture more sales from corporate and national
customers, thus reducing its reliance on the Woodville area. Preliminary goals for year three
are:
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• Woodville customers: 40%.
• Corporate customers: 30%.
• National Customers: 15%.
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• Internet: 15%.

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Adventure Travel Int'l. -- Sample Plan

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4.3 Expense Forecast

The marketing budget is between 5% to 6% of revenues. ATI's marketing director will
assume responsibility for everything except the website development budget. All ATI staff are
salaried, so labor hours, other than those included in the directors salary, are not included in
the budget. They will, however, play a key role in many of the planned promotional activities.

m
All members are expected to take part in the promotion of ATI. There are no 9-5 positions.

Monthly Expense Budget

Sa
$2,500

$2,000

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$1,500
Print and Radio Advertising
nP Personal Selling and Promotion
$1,000
Other

$500

$0
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Table: Marketing Expense Budget

Marketing Expense Budget 2005 2006 2007 2008 2009
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Print and Radio Advertising $15,000 $18,750 $20,625 $22,688 $27,225
Personal Selling and Promotion $8,500 $10,625 $11,688 $12,856 $15,428
Other $5,000 $2,500 $3,000 $3,000 $3,000
------------ ------------ ------------ ------------ ------------
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Total Sales and Marketing Expenses $28,500 $31,875 $35,313 $38,544 $45,653
Percent of Sales 5.33% 5.42% 5.46% 5.42% 5.83%
Contribution Margin $78,421 $91,619 $113,469 $125,116 $134,374
Contribution Margin / Sales 14.67% 15.58% 17.54% 17.58% 17.17%
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4.3.1 Expenses by Manager

The following chart details ATI's primary marketing. Jordan Barnes is responsible for the
success of the programs and the proper management of the budget. Year two expenditures
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could easily double if ATI generates sufficient revenues. As efforts to communicate with the
national and global markets increase, ATI expects to use several national publications for
advertising. Doing so will be costly.
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4.4 Linking Sales and Expenses to Strategy

ATI's marketing efforts have been designed to improve sales. ATI's director of marketing will
be responsible for tracking the various programs. If measurable results are not realized,
changes will be made to the marketing mix. Other factors, such as economic recession, sales
below estimates, high costs associated with the use of certain media, and others may

m
influence ATI's marketing budget and mix.

Sales vs. Expenses Monthly

Sa
$80,000

$70,000

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$60,000

$50,000

$40,000 Sales

$30,000
nP Expenses

$20,000

$10,000
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$0
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

4.5 Contribution Margin
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ATI anticipates that contribution margin will improve beginning in year three. By then, ATI
will have developed a better mixture of revenue sources, strategic alliances, and brand
tin

equity. Corporate accounts will bring higher contribution margins, as will other group trips.
Suppliers tend to give price breaks if the agency can book larger groups. In addition, ATI
plans to charge as much as 5% over the industry standard by the end of year three, as it will
be recognized as an industry leader.
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Adventure Travel Int'l. -- Sample Plan

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Contribution Margin Monthly

$12,000

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$10,000

$8,000

Sa
$6,000

$4,000

$2,000

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$0
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
nP
Table: Contribution Margin

Contribution Margin
2005 2006 2007 2008 2009
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Sales $534,607 $588,069 $646,878 $711,566 $782,722
Direct Cost of Sales $427,686 $464,575 $498,096 $547,906 $602,696
Other Variable Costs of Sales $0 $0 $0 $0 $0
------------ ------------ ------------ ------------ ------------
Total Cost of Sales $427,686 $464,575 $498,096 $547,906 $602,696
Gross Margin $106,921 $123,494 $148,782 $163,660 $180,026
Gross Margin % 20.00% 21.00% 23.00% 23.00% 23.00%

Marketing Expense Budget 2005 2006 2007 2008 2009
g

Print and Radio Advertising $15,000 $18,750 $20,625 $22,688 $27,225
Personal Selling and Promotion $8,500 $10,625 $11,688 $12,856 $15,428
Other $5,000 $2,500 $3,000 $3,000 $3,000
------------ ------------ ------------ ------------ ------------
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Total Sales and Marketing Expenses $28,500 $31,875 $35,313 $38,544 $45,653
Percent of Sales 5.33% 5.42% 5.46% 5.42% 5.83%
Contribution Margin $78,421 $91,619 $113,469 $125,116 $134,374
Contribution Margin / Sales 14.67% 15.58% 17.54% 17.58% 17.17%
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5.0 Controls

ATI's marketing efforts will be reviewed quarterly. Variance between sales goals for the first
year of operations and revenues will be ATI's only real source of comparison. ATI will seek
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customer feedback on marketing efforts and may conduct surveys or focus groups to test ad
effectiveness.
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5.1 Implementation Milestones

• ATI's grand opening event will take place in the first quarter. This will be a combined
effort with a local rock gym, one of ATI's strategic alliances. The event will be hosted
by a local radio station and will include a prize giveaway of an adventure travel
package.

m
• ATI will begin its corporate account marketing in the first quarter and hopes to secure
at least one corporate account during that time.
• ATI's website should be operational by the middle of the second quarter of operation.
The website will be capable of online transactions with secure site protections. ATI

Sa
banners will be placed at several World Wide Web locations.
• Tracking of ad exposure will begin in the first month of operation. ATI has a
designated 800 number that is only used in advertising.

Milestones

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Media Campaign
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Strategic Alliance Development

Grand Opening Promotion

First Trade Show
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Web Site Completion

Corporate Account Program

Customer Satisfaction Program
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Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
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Table: Milestones

Milestones
Milestone Start Date End Date Budget Manager Department
Media Campaign 9/1/99 1/1/00 $15,000 J. Barnes Marketing
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Strategic Alliance Development 9/1/99 3/1/00 $2,000 S. Delaney Marketing
Grand Opening Promotion 10/1/99 4/1/00 $800 Staff Marketing
First Trade Show S. Delaney &
4/12/00 4/15/00 $1,000 Marketing
S. Taylor
Web Site Completion 9/1/99 12/1/99 $5,000 S. Delaney Management
Corporate Account Program 9/1/99 7/1/00 $1,000 P. Mclellan Accounting
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Customer Satisfaction Program Customer
9/1/99 1/1/00 $1,000 S. Taylor
Service
Totals $25,800
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5.2 Marketing Organization

Marketing Director Jordan Barnes will be responsible for the planning and implementation of
ATI's Advertising, Communications, and Promotion activities. Mr. Barnes will work under the
supervision of Shea Delaney and will instruct all ATI members in their roles in the marketing
activities. ATI may use marketing consultants from a local firm to help with strategy.

m
5.3 Contingency Planning

Sa
These are the issues that will most likely call for changes in ATI's operations. The threats and
the manner with which they will be dealt are discussed:

INTERNET AND PRICE COMPETITION: When the airlines were deregulated, price competition
increased. Further, the Internet has provided a sales medium for consolidators who compete

ro
on price, and has also given consumers the ability to plan and arrange trips for themselves.
Thus the traditional agency faces greater competition. ATI plans to compete with other firms
on the Internet by having its own website on which to conduct communications and sales.
Price competition is a problem in any industry. ATI will not compete on price, mainly because
nP
it cannot win doing so. ATI will continue to communicate the benefits of its offering. It will
attempt to remain competitively priced but will not defend its price structure.

LOCAL COMPETITION (EXISTING AND POTENTIAL): There are no agencies in the Woodville
area that specialize solely in adventure travel. However, any one of the approximately 30
agencies can book an adventure trip. Moreover, additional adventure travel specialists may
Pla

follow ATI's lead. Competition is already present. It is likely that additional agencies may
begin to present themselves as adventure travel specialists. It is also possible that new
agencies will enter the Woodville market with a similar offering. ATI will attempt to establish
itself as a market leader and maintain that position if new competitors emerge. Additional
safeguards include ongoing analysis of additional segments of the travel market in which ATI
might successfully participate. In addition, opportunities for vertical and horizontal integration
will be examined.
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ECONOMIC DOWNTURN: The strong domestic economy has been good for the travel and
tourism industry. Continued growth is anticipated. However, unforeseen or unanticipated
economic recession would reduce disposable income and threaten ATI's sales. In the event of
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an economic downturn, ATI will continue to promote and likely expand its offering. ATI
already operates on a skeleton staff, and aside from small budget cuts, there is little that can
be done financially.
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Adventure Travel Int'l. -- Sample Plan Appendix

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Appendix Table: Sales Forecast

Sales Forecast
Sales Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Woodville Market (Individual) $20,000 $22,000 $24,200 $26,620 $29,282 $32,210 $35,431 $38,974 $42,872 $47,159 $51,875 $57,062

Sa
National Market $2,000 $2,200 $2,420 $2,662 $2,928 $3,221 $3,543 $3,897 $4,287 $4,716 $5,188 $5,706
Internet $500 $550 $605 $666 $732 $805 $886 $974 $1,072 $1,179 $1,297 $1,427
Corporate Market $2,500 $2,750 $3,025 $3,328 $3,660 $4,026 $4,429 $4,872 $5,359 $5,895 $6,484 $7,133
Total Sales $25,000 $27,500 $30,250 $33,276 $36,602 $40,262 $44,289 $48,717 $53,590 $58,949 $64,844 $71,328

Direct Cost of Sales Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Woodville Market (Individual) $16,000 $17,600 $19,360 $21,296 $23,426 $25,768 $28,345 $31,179 $34,298 $37,727 $41,500 $45,650
National Market $1,600 $1,760 $1,936 $2,130 $2,342 $2,577 $2,834 $3,118 $3,430 $3,773 $4,150 $4,565
Internet $400 $440 $484 $533 $586 $644 $709 $779 $858 $943 $1,038 $1,142

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Corporate Market $2,000 $2,200 $2,420 $2,662 $2,928 $3,221 $3,543 $3,898 $4,287 $4,716 $5,187 $5,706
Subtotal Direct Cost of Sales $20,000 $22,000 $24,200 $26,621 $29,282 $32,210 $35,431 $38,974 $42,872 $47,159 $51,875 $57,062

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Adventure Travel Int'l. -- Sample Plan Appendix

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Appendix Table: Marketing Expense Budget

Marketing Expense Budget Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Print and Radio Advertising $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250
Personal Selling and Promotion $708 $708 $708 $708 $708 $708 $708 $708 $708 $708 $708 $708

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Other $417 $417 $417 $417 $417 $417 $417 $417 $417 $417 $417 $417
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Sales and Marketing Expenses $2,375 $2,375 $2,375 $2,375 $2,375 $2,375 $2,375 $2,375 $2,375 $2,375 $2,375 $2,375
Percent of Sales 9.50% 8.64% 7.85% 7.14% 6.49% 5.90% 5.36% 4.88% 4.43% 4.03% 3.66% 3.33%
Contribution Margin $2,625 $3,125 $3,675 $4,280 $4,945 $5,677 $6,483 $7,368 $8,343 $9,415 $10,594 $11,891
Contribution Margin / Sales 10.50% 11.36% 12.15% 12.86% 13.51% 14.10% 14.64% 15.12% 15.57% 15.97% 16.34% 16.67%

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Adventure Travel Int'l. -- Sample Plan Appendix

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Appendix Table: Contribution Margin

Contribution Margin
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Sales $25,000 $27,500 $30,250 $33,276 $36,602 $40,262 $44,289 $48,717 $53,590 $58,949 $64,844 $71,328

Sa
Direct Cost of Sales $20,000 $22,000 $24,200 $26,621 $29,282 $32,210 $35,431 $38,974 $42,872 $47,159 $51,875 $57,062
Other Variable Costs of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Cost of Sales $20,000 $22,000 $24,200 $26,621 $29,282 $32,210 $35,431 $38,974 $42,872 $47,159 $51,875 $57,062
Gross Margin $5,000 $5,500 $6,050 $6,655 $7,320 $8,052 $8,858 $9,743 $10,718 $11,790 $12,969 $14,266
Gross Margin % 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00%

Marketing Expense Budget Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Print and Radio Advertising $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250

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Personal Selling and Promotion $708 $708 $708 $708 $708 $708 $708 $708 $708 $708 $708 $708
Other $417 $417 $417 $417 $417 $417 $417 $417 $417 $417 $417 $417
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Sales and Marketing Expenses $2,375 $2,375 $2,375 $2,375 $2,375 $2,375 $2,375 $2,375 $2,375 $2,375 $2,375 $2,375
Percent of Sales 9.50% 8.64% 7.85% 7.14% 6.49% 5.90% 5.36% 4.88% 4.43% 4.03% 3.66% 3.33%
Contribution Margin $2,625 $3,125 $3,675 $4,280 $4,945 $5,677 $6,483 $7,368 $8,343 $9,415 $10,594 $11,891

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Contribution Margin / Sales 10.50% 11.36% 12.15% 12.86% 13.51% 14.10% 14.64% 15.12% 15.57% 15.97% 16.34% 16.67%

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