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T HE S TAR M OBILE

M ARKETING P LAN
Marketing Management

“Malaysia’s very first Mobile Newspaper! Get your news on the go!”

Ding Wei Yee (1071200152)


BMM 6034 (Marketing Management)
10/30/2007
Ding Wei Yee (1071200152) 10/30/2007

THE STARMOBILE MARKETING PLAN


Marketing Management

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this business plan is confidential; therefore, reader agrees not to disclose it without the
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It is acknowledged by reader that information to be furnished in this business plan is in all


respects confidential in nature, other than information which is in the public domain through
other means and that any disclosure or use of same by reader, may cause serious harm or
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Upon request, this document is to be immediately returned to _______________.

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Signature

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Date

This is a Marketing plan. It does not imply an offering of securities.

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TABLE OF CONTENTS
Content Page
1.0 EXECUTIVE SUMMARY 3
1.1 OBJECTIVES 3
1.2 MISSION 3
1.3 KEYS TO SUCCESS 4
2.0 MARKET ANALYSIS SUMMARY 4
2.1 MARKET SEGMENTATION 5
2.2 TARGET MARKET STRATEGIES 9
2.2.1 MARKET DEMOGRAPHICS 10
2.2.2 MARKET NEEDS 13
2.2.3 MARKET TRENDS 13
3.0 S.W.O.T ANALYSIS 13
3.1 STRENGTHS 13
3.2 WEAKNESSES 14
3.3 OPPORTUNITIES 14
3.4 THREATS 14
4.0 MAIN COMPETITORS 14
4.1 COMPETITIVE EDGE 15
5.0 PRODUCTS AND SERVICES 15
5.1 COMPETITIVE COMPARISON 16
5.2 FULFILLMENT 17
5.3 TECHNOLOGY 17
6.0 MARKETING STRATEGY 17
6.1 POSITIONING 18
6.2 MARKETING MIX 18
7.0 SALES STRATEGY 18
7.1 SALES FORECAST 19
8.0 FINANCIAL PLAN 22
8.1 START UP 22
8.2 START UP FUNDING 23
8.3 PERSONNEL PLAN 24
8.4 ASSUMPTIONS 25
8.5 KEY FINANCIAL INDICATORS 25
8.6 BREAK-EVEN ANALYSIS 26
8.7 PROJECTED PROFIT AND LOSS 27
8.8 PROJECTED BALANCE SHEET 29
9.0 CONTROL 30
9.1 MARKETING ORGANIZATION 30
9.2 CONTINGENCY PLANNING 31

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1.0 EXECUTIVE SUMMARY


The Star, Malaysia's leading English daily is preparing to launch TheStarMobile, Malaysia
first newspaper to go mobile. The mobile market has been lucrative to those who dare
venture into a new media. In 2006 alone, the mobile revenue segment amounted to RM14.5
billion (source: MCMC). The mobile market in Malaysia can still be described as being in the
stage of infancy as compared to the more accomplished countries like Scandinavia and Japan
where mobile is not a new media but a necessary tool in every marketing plan. With that
said, TheStarMobile is actually paving new paths for other companies in this field.
TheStarMobile will be targeting various segments in the consumer market and business
markets taking advantage of the vast mobile market that just keeps getting bigger and more
sophisticated every day. With growing 3G awareness within the mobile generation, the time
is ripe to kick-start TheStarMobile as the first mobile news channel for Malaysians replacing
TV, Radio and maybe even the paper in the future.

The primary marketing objectives of this plan is to achieve a new level of branding for The
Star and its mobile arm TheStarMobile using the analytical tools of Blue Ocean Strategy
(2005) by W.Chan Kim and Renee Mauborgne published by Harvard Business School Press
to analyze the market and devising a new plan to reach broader audiences opening a new
world of Blue Ocean for TheStarMobile.

1.1 OBJECTIVES
The objectives of TheStarMobile in the long run are to do the following:

 Create a new blue ocean of customers while riding on The Star newspapers existing
readers.
 To establish itself as a brand not just a part of The Star newspapers.
 Canvass entire mobile market with a comprehensive full market coverage strategy.
 To increase gross to more than 25%.
 To increase sales by 50%

1.2 MISSION
The mission of TheStarMobile is to provide The Star newspaper readers and the mass of the
mobile market with a comprehensive, easy-to-use and hyped-up mobile news channel where
news comes in easy little bite sizes that better suit the generation of people on-the-go. SMS,
MMS, Mobile Content and Mobile Media Services including Premium SMS services are also
provided for the Star Publications (Malaysia) Bhd as a solution to their growing MIS needs
within the corporation. TheStarMobile also boasts a full range of telecom service facilities
including 3G Video, WAP infrastructure and a sophisticated billing system. This all means
that TheStarMobile is able to offer one-stop mobile solutions capability enabling our
customers to deal with one supplier that has the technology and international reach to fulfill
all their requirements. Our client list include some of the world's leading portals, national
broadcasters, national and regional publishers, international carriers and network operators
and hundreds of independent telecommunications companies, testifies to the company's
ability to deliver high quality services at the lowest total cost of ownership.

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Through our core technology Platforms - customers can use self-provisioning mobile and
telephony services and have access to a vast range of our readymade services. This is a
unique offering that sets TheStarMobile and our customers apart enabling them
communicate freely internally with staff, externally to contractors / suppliers and to generate
revenue quickly from their SMS/MMS campaigns utilizing unbranded content such as
competitions, quizzes, games, news and information services, presented as their own. Speed
to market is the key in the fast moving telecommunications sector.

TheStarMobile's core revenues will be generated from these core technology platforms-
access charges to retrieve premium information, use of platform and provision of technical
assistance.

TheStarMobile's mission statement is an expression of its basic purpose and intends to


define the company's business and marketplace and clarify its primary service orientation:

"To be the best supplier of mobile technology solutions to our


global communication customers and business partners at
the lowest total cost of ownership"

1.3 KEYS TO SUCCESS


Our core values describe who we are and why we exist

 Customer Driven - To understand and exceed customer needs and expectations

 Integrity - Transparency in all business dealings

 Operational Excellence - To demonstrate competitive superior quality and


performance in all our products and services

 Economic Value - Maximizing value through products and services while also
meeting our profit objectives

2.0 MARKET ANALYSIS SUMMARY


Mobile is by far the largest media audience in history, and with 808.3 million subscribers in
2005 in the Asia-Pacific region alone and a growth rate of 16.8% (source: Datamonitor), the
mobile medium promises to reach a far broader audience than radio, TV or the internet.
Distributing your brand in mobile can catapult it to worldwide recognition faster than
anything else.

The Asia-Pacific wireless telecommunications services market generated total revenues of


$150.1 billion in 2005; this figure represents an increase of 12.3% on the previous year and a

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compound annual growth rate (CAGR) of 16.1% for the five-year period spanning 2001-2005.
Asia-Pacific is the world's fastest growing region for this market. In the same period, the
European market grew with a CAGR of 12.8% and the Americas regional market with a
CAGR of 14.3%. Asia-Pacific had 808.3 million wireless telecommunications subscriptions in
2005: this is an increase of 16.8% over the previous year and represents a CAGR of 24.5% for
the five-year period spanning 2001-2005. This indicates that prices within this market are
falling in the Asia-Pacific region, as the technology becomes widespread, and competition
causes price erosion in the market.

TheStarMobile has identified the 19.5 million mobile subscribers in Malaysia including The
Star's readership of 1.4 million (source: Frost & Sullivan) as key target market for business.

The mobile market will be analyzed using new analytical tools provided by the Blue Ocean
Strategy opening up new uncontested markets where competitors wherever they maybe will
become totally irrelevant.

2.1 MARKET SEGMENTATION


The mobile demand and penetration rate as at 2006 is 72.3% translating into 19.5 million out
of the total population of 26.9 million Malaysians.

In respect to the service providers in Malaysia, Maxis takes the lead. Out of the total number
of mobile subscribers at 19.5 million as at 2006, the respective providers Maxis, Celcom and
Digi holds 42%, 31% and 27% respectively.

The market has just begun expanding here in Asia as the mobile subscribers penetration
rate has been increasing steadily over the years and have yet to show signs of slowing down.
Malaysia’s mobile market development has been quite remarkable compared to the selected
economies namely: China, United State of America, Malaysia, South Korea, Australia,
Taiwan, UK and Hong Kong. These economies were selected on the basis of the size of their
mobile market and the potential for growth.

The 3G market is still in a state of infancy but in the space of 1 year from 2005 to 2006 the
amount of 3G subscribers increased by close to 800% a remarkable feat for a developing
country.

The strategy canvas for TheStarMobile will canvass the other mobile companies in the
market including the 3 service providers. The market for mobile has been tremendously
diluted by the mobile content companies and SMS service companies. They have not only
saturated the market to a point that there is no longer any brand loyalty amongst the mobile
users but they have created a very bad reputation for a start-up mobile news channel on
WAP. Fortunately The Star is the leading English daily in Malaysia and that helps lend
more credibility to the product.

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Service Providers Market Share (2006)

27%
42%

Maxis
Celcom
Digi
31%

(source: MCMC, 2006)

Mobile Penetration Rate (1998-2006)

80
70
Penetration Rate (%)

60
50
40
30 Penetration
20 Rate

10
0
1998 1999 2000 2001 2002 2003 2004 2005 2006

(source: MCMC, Q2 2007)

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Mobile phones per 100 people

Hong Kong 122.6


UK 102.2
Taiwan 97
Australia 91.4
South Korea 79.4
Mobile phones
Malaysia 74.1
per 100 people
Japan 74
USA 67.6
China 29.9

0 50 100 150
(source: MCMC, Q2 2007)

3G Subscribers
450000

400000
406717
350000

300000

250000

200000 3G
Subscribers
150000

100000

50000
45692
0
2005 2006 (source: MCMC, 2007)

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Mobile Market Strategy Canvas

Strategy Canvas for Mobile Industry 2004 - 2007

High

Mobile Companies

Low

Price Chat MMS Video Value added services Ease-of-use


Mobile Content services SMS servicesPlatform Technology
capability 3G capability Wi-Fi
services capability

Strategy Canvas for TheStarMobile

Strategy Canvas for TheStarMobile 2008

High

TheStarMobile

Low

Price Chat services MMS Video Value added services Ease-of-use


Mobile Content SMS servicesPlatform Technology
capability 3G capability Wi-Fi
services capability

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Market Analysis (source: MCMC, 2006)

Year 1 Year 2 Year 3 Year 4 Year 5


Potential Growth CAGR
Customers
Maxis 16% 8,100,000 9,396,000 10,899,360 12,643,258 14,666,179 16.00%
Celcom 16% 6,100,000 7,076,000 8,208,160 9,521,466 11,044,901 16.00%
Digi 16% 5,300,000 6,148,000 7,131,680 8,272,749 9,596,389 16.00%
Total 16.00% 19,500,000 22,620,000 26,239,200 30,437,473 35,307,469 16.00%

Maxis, Celcom & Digi Subscribers

Mobile Phone Connections by Service


Providers (2003-2006)
9
8
No. of connections

7
6
(million)

5
Maxis
4
3 Celcom

2 Digi
1
0
2003 2004 2005 2006
(source: MCMC, 2006)

2.2 TARGET MARKET STRATEGIES


TheStarMobile will be starting off by targeting existing The Star newspapers readers by
using the Product Specialization Strategy. Using this strategy, the products will catered to
the 3 main categories that are; working men (21 years and above), women (21 years and
above) and school children. These three main categories will be analyzed thoroughly by state,
income group, number of SMS a day and so on in the following charts and tables.

In the second phase of the plan after the first phase is executed, a new target market
strategy (Full Market Coverage) will be initiated to cover the entire mobile market in
Malaysia and abroad. This will comprise of a differentiated strategy in which separate
marketing mix is designed to cater to different target segments.

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2.2.1 MARKET DEMOGRAPHICS


TheStarMobile will first of all be catering to the many different readers of The Star
newspapers and the mobile market in general. Refer to the table below.

Newspaper Readership (Q2, 2007)


The Star Daily 1, 325, 000
Sunday Star 1, 441, 000
(source: Synnovate’s Media Atlas Q2, 2007)

Mobile Subscribers by State: Selangor continues to be the state with most subscribers 3
years in a row. It has 21% of the subscriber base in 2006 this is followed by Johor (13%) and
Federal Territory Kuala Lumpur (8.6%). Percentage distributions of other states are as
follows:

State Percentage share of mobile phone subscriber base


2004 2005 2006
Selangor 25.0 24.7 21.7
Johor 13.2 13.7 13.0
Kuala Lumpur 9.5 9.7 8.7
Perak 8.1 7.3 7.7
Sarawak 6.4 5.9 7.1
Kedah 6.4 5.9 6.6
Pulau Pinang 6.9 7.4 6.6
Sabah 6.0 6.4 6.4
Pahang 4.0 4.5 4.8
Kelantan 3.6 3.7 4.6
Negeri Sembilan 4.0 3.9 4.3
Terengganu 2.5 2.9 3.8
Melaka 3.5 3.0 3.7
Perlis 0.7 0.8 0.9
Labuan 0.2 0.2 0.3
(source: MCMC, 2006)

Percentage distribution of subscribers by broad age groups: Adults (ages 20-49 years as at
last birthday) continue to be the biggest contributing group accounting for 66.8% of the
subscriber base. Pre-teens and teens are the second largest group followed by seniors (aged
50 and above). Refer to the chart below:

Percentage distribution of Mobile subscriber base

Pre-teen & Teens Adults Seniors

78.8 78.2 (source: MCMC, 2007)


66.8

20.5
12.3 13.1 9 8.7 12.6

2004 2005 2006

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Percentage distribution of subscribers by gender: survey results show that males make for
most of the subscriber base by 58.3% and females 41.7%. The differences between the
percentages of the 2 sexes have narrowed down in the last 3 years. Refer to chart below:

Percentage distribution of Mobile subscriber base


70

60

50

40
Male
30
Female
20

10

0
2004 2005 2006
(source: MCMC, 2007)

Percentage distribution of subscribers by income category: About 90% of the mobile phone
subscriber base is from income groups of less than RM 3,000 a month and the remaining 10%
are from income groups of RM 3,000 or higher. Refer to chart below:

Percentage distribution of Mobile subscriber base

Percentage (%)

RM 5,000 and above 3.3

RM 3,000 < RM 5,000 7.2

RM 1,000 < RM 3,000 50.4

< RM 1,000 39.1

(source: MCMC, 2007)

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Percentage distribution of subscribers by ethnicity: The Malay race accounts for 57.3% of the
subscriber base followed by the Chinese (28.9%) and the Indians (6.2%). The other ethnicities
are included in the chart below:

Percentage distribution of Mobile subscriber base

Malay Chinese Indian Sabah & Sarawak Others

57.3
53.9

32.4
28.9

6.3 6.5 6.2 6.7


0.9 0.9

2005 2005
(source: MCMC, 2007)

Percentage distribution of mobile subscribers purchasing products with their mobile phones:
Percentage increase between 2005 and 2006 is not much but that does not indicate that the
market is going nowhere. Refer to chart below:

Percentage distribution of Mobile subscribers


purchasing mobile products

2005 2006
81.3 82.4

18.7 17.6

No Yes
(source: MCMC, 2007)

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2.2.2 MARKET NEEDS


TheStarMobile seeks to fulfill the following benefits that are important to customers:

 Ease-of-use
 Reliable and honest products
 Mobile Business tools
 Mobile Stock Options tools
 New creative products
 Low costs
 Available anytime, anywhere 24/7
 Broader reach and instant connectivity
 Convenience and personalization

2.2.3 MARKET TRENDS


Based on market analysis, the mobile market has been enjoying a growth rate of around 20%
for the past years. The mobile market is indeed a lucrative one and will continue to provide
opportunities for the adventurous business entrepreneur.

TheStarMobile is taking this opportunity to dive into this lucrative ocean and provide the
current mobile consumer market with better, reliable products and services at a cheap price.

3.0 S.W.O.T ANALYSIS


The SWOT analysis provides us with an opportunity to examine the internal strengths and
weaknesses TheStarMobile must address. It also allows us to examine the opportunities
presented to TheStarMobile as well as potential threats.

3.1 STRENGTHS
TheStarMobile identified the following as strengths:

 We are a growing company


 We pioneer new technologies
o As mobile technology constantly evolves, we develop solutions that can
enhance your business by bringing new services to market first.
o We are constantly striving to bring new solutions to the market that will
cement our position within the market place with our core proprietary
platform technologies.
 We put customers first
o Customers are the most important element of TheStarMobile, they are our
biggest assets, and we strive to exceed customers' expectations
o We work with our customers to gain an understanding of their business, their
goals and objectives to ensure they receive the best possible service and the
right solutions to meet their needs.

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3.2 WEAKNESSES
TheStarMobile identified the following as weaknesses:

 A dependence on quickly changing technology.

 Cost factor associated with keeping state-of-the-art hardware.

 A budding company that needs to build a strong reputation in the industry

3.3 OPPORTUNITIES
TheStarMobile identified the following as opportunities within the industry:

 Growing population of mobile subscribers.

 Social bonds fostered by the new mobile communities.

 Strategic alliances offering sources for referrals and joint marketing activities to
extend our reach.

 27.4 million mobile market yet to be penetrated.

3.4 THREATS
TheStarMobile identified the following as threats within the industry:

 Rapidly falling cost of Internet access.

 Emerging local competitors.

4.0 MAIN COMPETITORS


At this point in time, TheStarMobile does not have any immediate competitor in the industry
although it would be easy for companies in the similar mobile line to try to adapt to some of
the products although the platform technology is trademarked. Anyhow in order to keep
competition at bay, TheStarMobile has benchmarked a few companies that have enjoyed
significant success in the region.

Leading companies in the mobile industry:

 China Mobile (Hong Kong) Limited


China Mobile, formerly China Telecom (Hong Kong), is a provider of cellular
telecommunications services in China.
For fiscal year 2005, the company reported revenues of $33.1 billion, an increase of
34.9% on fiscal 2004. Net income for the year increased by 36.1% and was recorded
at $7.3 billion.
 China Unicom
China Unicom is a telecommunications company, operating primarily in China. The
company provides mobile communications, paging, long distance and data services

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in China, and is the second largest mobile phone operator in the country. China
Unicorn is headquartered in Beijing, China and has approximately 39,000 employees.
For fiscal year 2005, the company reported revenues of $11.4 billion, an increase of
12.5% on fiscal 2004. Net income for the year increased by 15.3% and was recorded
at $645.6 million.
 NTT Corporation
NTT (Nippon Telegraph and Telephone) Corporation functions as a holding company
for the NTT Group, which is the largest telecommunications provider in Japan. The
company is headquartered in Tokyo, Japan.
For the fiscal year ended March 2006, the company generated revenues of $96.6
billion, a decrease of 0.6% from the previous year. Net income was $4,529 million and
decrease of 29.8% from the previous year.

4.1 COMPETITIVE EDGE


TheStarMobile’s competitive edge is our positioning as strategic ally with clients, who are
clients more than customers. By building a business based on long-standing relationships
with satisfied clients, we simultaneously build defences against competition. The longer the
relationship stands, the more we help our clients understand what we offer them and why
they need it.

5.0 PRODUCTS AND SERVICES


TheStarMobile has designed a range of products and services for the entire mobile
population. Products and services accompanied by sales literature below:

No Products / Services Sales Literature


1 Exclusive News Feed Service Provides RSS Exclusive News feed in almost real-time
so that customers can always be up to date, anytime.
Subscription Fee: RM2.00 for life
Per SMS: RM0.60
Per MMS: RM1.00
News updates will be sent to customers based on their
preferences like Sports, World News, Business, Health
and Women.
2 Stock Exchange Service Provides Stock Exchange updates directly to your
mobile.
You can even use our free products on our Star Stock
WAP page like stock calculator and etc.
Subscription Fee: RM2.00 for life
Per SMS: RM0.60
Per MMS: RM1.00
News updates will be sent to customers based on their
preferences like 1st Board, 2nd Board and others.
3 StarJobs Service Provides a Job search community for graduates who
are looking for jobs.
Subscription Fee: RM1.00 for life
Per SMS: RM0.50
Job opportunities will be sent directly to mobile and

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graduates can take their pick from there.


Companies can also list themselves under StarJobs to
be in the forefront of headhunting for new talents in
the industry.
4 Mobile News Streaming Provides a general news summary of National and
World news with business and sports updates
Subscription Fee: RM1.00 for life
Per SMS: RM0.50
News updates will be sent to customers twice daily.
5 StarMobile Subscription Subscription service for all Star Mobile products:
Comics, Wallpapers, Games, Sudoku, Videos and
Ringtones
Subscription Fee: RM2.00 for life
Every new subscriber will receive 10 free products of
customers’ choice.
6 Comics RM4.00 per branded comic
RM2.00 per standard comic
7 Wallpapers RM2.00 per wallpaper
8 Games RM4.00 per Java Game
9 Star Sudoku RM3.00 per Download
10 Videos RM3.00 per Video
11 Ringtones RM2.00 per Mp3 Ringtone
12 Advertisement Service Based on The Star Ad Rates (Starting 2008)

5.1 COMPETITIVE COMPARISON


Today there is a critical mass of download-capable, colour handsets in the hands of
consumers and 100 percent of these phones are capable of interacting and responding in real
time. No other medium provides the occasion quite like mobile to establish a one-to-one
relationship with an audience. The demand for games and other interactive mobile content
such as news, sports and information services, images, and music, is booming and according
to industry analysts, is playing an increasingly dominant role in mobile phone usage.
Advancing technology combined with a maturing market has created an unprecedented
marketing opportunity to reach a new audience of gigantic proportions.

Why Choose TheStarMobile?

 We pioneer new technologies - As mobile technology constantly evolves, we


develop solutions that can enhance your business by bringing new services to market
first. We are constantly striving to bring new solutions to the market that will
cement our position within the market place; we have so far commercialised
our platform technologies and will strive to develop better, faster and more cost
effective solutions.

 We put customers first - Customers are the most important element of


TheStarMobile, they are our biggest assets, and we strive to exceed. We work with
our customers to gain an understanding of their business, their goals and objectives
to ensure they receive the best possible service and the right solutions to meet their
needs.

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5.2 FULFILLMENT
While the TheStarMobile platform technologies are an important part of the mobile
solutions, the information and actions generated from mobile transactions are equally
important.

Our solution includes a normalized database from which TheStarMobile and customers can
access and integrate TheStarMobile data into their own business processes. Access rights to
data will be closely held, and authorization routines will be implemented at the site,
database and device level.

5.3 TECHNOLOGY
TheStarMobile will sell complimenting products of the highest quality, and latest scientific
development.

TheStarMobile incorporates the proprietary platform technologies, latest hardware and


software to manage inventories, client database, point of sale, email capabilities, Web-
enabled networking, inventory, historical log, employee records, transaction history, accounts
receivable/payable and payroll. Back-up of the system is performed daily.

A thank you note will be sent automatically after services have been performed.

6.0 MARKETING STRATEGY


TheStarMobile will be offering many unique products and services that will be introduced to
the market through targeted advertising:

 SMS and MMS blasts


o By gathering the information from TheStarOnline database, start by blasting
Free-of-Charge advertisement SMS and MMS with free gifts if the start
subscribing.
 SMS competitions
o Conduct SMS competition through The Star radio stations and get DJ
celebrities to spread the word.
 E-newsletters
o Sent through TheStarMobile website.
 E-Commerce site optimization
o TheStarMobile e-commerce website must be optimized periodically to stay on
top of the Google analytics ranking system.
 Direct sales
o Direct Sales Team will manage the government agencies and business
partners through personal sales calls. This market is a long term, repetitive
business where relationships are a key component to success.
o Sales will be targeted to Malaysian mobile market in the early stages. Plans
to expand into the Asia-Pacific markets are scheduled for 2009.

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6.1 POSITIONING
TheStarMobile’s positioning statement:

“For Malaysian Mobile users who needs information/entertainment on


the go and TheStarMobile is your one-stop mobile solutions company
that provides News, Entertainment and Services with low-prices."

6.2 MARKETING MIX


Product The names of the products are as listed below, however other details on
products and services can be referred to, 5.0 Products and Services:
1. Exclusive News Feed Service
2. Stock Exchange Service
3. StarJobs Service
4. Mobile News Streaming
5. StarMobile Subscription
6. Comics
7. Wallpapers
8. Games
9. Star Sudoku
10. Videos
11. Ringtones
12. Advertisement Service
Price Prices are as detailed under 5.0 Products and Services
Place Anywhere as long as there is mobile reception!
Promotion Promotion plan:
To reward every new subscriber with 10 free TheStarMobile products and
services of their choice. This way, most customers will choose the
subscription option. Although this may put a slight dent on our growth
curve, in the long run this will easily educate customers to use more
services as it is the services that will be generating most of the revenue in
the future.

7.0 SALES STRATEGY


TheStarMobile will be offering a unique solution that will be introduced to the market
through targeted advertising, SMS and MMS blasts, e-newsletters, website optimization and
direct sales.

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Direct Sales Team will manage the government agencies and business partners through
personal sales calls. This market is a long term, repetitive business where relationships are a
key component to success.

Sales will be targeted to The Star readers and TheStarOnline users in the early stages. Plans
to expand into the Asia-Pacific markets are scheduled for 2009.

7.1 SALES FORECAST


The table below outlines the sales forecast and cost of goods sold. The forecast is based on
reasonable sales projections within this very large market.

The exponential growth of the access charge revenues is based on the cumulative volume of
the products and services sold. For every unit sold, TheStarMobile charges a monthly fee to
access or subscription fee of RM1.00 to RM3.00 depending on the product or service.

The table and graph below will project the sales of the first 3 years.

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Sales Forecast
Year 1 Year 2 Year 3
Unit Sales
Exclusive News Feed Service 525,265 875,442 919,214
Stock Exchange Service 700,354 1,197,318 1,257,183
StarJobs Service 632,706 1,054,510 1,107,235
Mobile News Streaming 376,089 843,608 970,150
TheStarMobile Subscription 3,979,282 7,958,563 8,356,491
Comics 421,804 843,608 885,788
Wallpapers 632,706 1,265,412 1,328,682
Games 843,608 1,687,215 1,771,575
Star Sudoku 843,608 1,687,215 1,771,575
Videos 843,608 1,687,215 1,771,575
Ringtones 632,706 1,265,412 1,328,682
Advertisement Service 795,856 1,591,713 1,671,298
Total Unit Sales 11,227,590 21,957,230 23,139,448

Unit Prices Year 1 Year 2 Year 3


Exclusive News Feed Service $1.00 $1.00 $1.00
Stock Exchange Service $1.00 $1.00 $1.00
StarJobs Service $1.00 $1.00 $1.00
Mobile News Streaming $2.00 $2.00 $2.00
TheStarMobile Subscription $2.00 $2.00 $2.00
Comics $1.00 $1.00 $1.00
Wallpapers $3.00 $3.00 $3.00
Games $4.00 $4.00 $4.00
Star Sudoku $4.00 $4.00 $4.00
Videos $3.00 $3.00 $3.00
Ringtones $3.00 $3.00 $3.00
Advertisement Service $1,500.00 $1,500.00 $1.00

Sales
Exclusive News Feed Service $525,265 $875,442 $919,214
Stock Exchange Service $700,354 $1,197,318 $1,257,183
StarJobs Service $632,706 $1,054,510 $1,107,235
Mobile News Streaming $752,178 $1,687,215 $1,940,300
TheStarMobile Subscription $7,958,563 $15,917,127 $16,712,982
Comics $421,804 $843,608 $885,788
Wallpapers $1,898,117 $3,796,235 $3,986,046
Games $3,374,431 $6,748,862 $7,086,300
Star Sudoku $3,374,431 $6,748,862 $7,086,300
Videos $2,530,823 $5,061,646 $5,314,725
Ringtones $1,898,117 $3,796,235 $3,986,046
Advertisement Service $1,193,784,489 $2,387,568,978 $1,671,298
Total Sales $1,217,851,278 $2,435,296,036 $51,953,417

Direct Unit Costs Year 1 Year 2 Year 3


Exclusive News Feed Service $0.25 $0.25 $0.25
Stock Exchange Service $0.25 $0.25 $0.25
StarJobs Service $0.25 $0.25 $0.25
Mobile News Streaming $0.50 $0.50 $0.50
TheStarMobile Subscription $0.00 $0.00 $0.00
Comics $0.25 $0.25 $0.25

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Ding Wei Yee (1071200152) 10/30/2007

Wallpapers $0.75 $0.75 $0.75


Games $1.00 $1.00 $1.00
Star Sudoku $0.00 $0.00 $0.00
Videos $0.75 $0.75 $0.75
Ringtones $1.50 $1.50 $1.50
Advertisement Service $450.00 $450.00 $0.30

Direct Cost of Sales


Exclusive News Feed Service $131,316 $218,860 $229,804
Stock Exchange Service $175,088 $299,330 $314,296
StarJobs Service $158,176 $263,627 $276,809
Mobile News Streaming $188,044 $421,804 $485,075
TheStarMobile Subscription $0 $0 $0
Comics $105,451 $210,902 $221,447
Wallpapers $474,529 $949,059 $996,512
Games $843,608 $1,687,215 $1,771,575
Star Sudoku $0 $0 $0
Videos $632,706 $1,265,412 $1,328,681
Ringtones $949,059 $1,898,117 $1,993,023
Advertisement Service $358,135,347 $716,270,693 $501,389
Subtotal Direct Cost of Sales $361,793,325 $723,485,020 $8,118,610

Sales Forecast for 1st Year

$140,000,000 Exclusiv e News Feed Serv ice

$120,000,000 Stock Exchange Serv ice


StarJobs Serv ice
$100,000,000
Mobile News Streaming
$80,000,000
TheStarMobile Subscription
$60,000,000 Comics
$40,000,000 Wallpapers
Games
$20,000,000
Star Sudoku
$0
Videos
Ringtones
Adv ertisement Serv ice

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Ding Wei Yee (1071200152) 10/30/2007

8.0 FINANCIAL PLAN


The most important element in the financial plan is the critical need for improving several of
the key factors that impact cash flow:

1. We must at any cost stop the slide in inventory turnover and develop better
inventory management to bring the turnover back up to 6 turns by the third year.
This should also be a function of the shift in focus towards service revenues to add to
the product revenues.

2. We must also bring the gross margin back up to 30%. This too is related to improving
the mix between hardware and service revenues, because the service revenues offer
much better margins.

The premier element in TheStarMobile’s financial plan is initiating, maintaining, and


improving the factors that create, stabilize, and increase our cash flow:

1. We must create visibility so as to create customer flow.

2. We must maintain a dependable, cheerful employee force so as to minimize turnover.

3. Create a brisk turnaround on our products, always creating new exciting products

8.1 START UP
The start up of this company will require the following expenses as listed in the table below:

Start-up
Requirements
Start-up Expenses
Legal $15,000
Stationery etc. $1,500
Insurance $10,000
Computer $150,000
Platform Technologies Trademark $200,000
Other $100,000
Total Start-up Expenses $476,500

Start-up Assets
Cash Required $100,000
Other Current Assets $100,000
Long-term Assets $250,000
Total Assets $450,000

Total Requirements $926,500

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Ding Wei Yee (1071200152) 10/30/2007

Start Up

$500,000

$450,000

$400,000

$350,000

$300,000

$250,000

$200,000

$150,000

$100,000

$50,000

$0
Expenses Assets Investment Loans

8.2 START UP FUNDING


 Investment funding:
o TheStarMobile is in the process of negotiating with potential investors for the
seed cash needed to start the business. It is expected that $125,000 will be
raised to start the business. It is expected that no more than 15% interest
will be given to each investor.
 Bank Financing:
o TheStarMobile is submitting business plans and other requested documents
to financial institutions in pursuit of the additional $625,000 needed to
finance the rest of the company and provide operating cash for the business.
It is expected that the loan will be a part of the SBA 7(a) program. It is
assumed that the terms of the loan will require repayment in 7 years, at a
rate of 8%

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Ding Wei Yee (1071200152) 10/30/2007

Start-up Funding
Start-up Expenses to Fund $476,500
Start-up Assets to Fund $450,000
Total Funding Required $926,500

Assets
Non-cash Assets from Start-up $350,000
Cash Requirements from Start-up $100,000
Additional Cash Raised $0
Cash Balance on Starting Date $100,000
Total Assets $450,000

Liabilities and Capital

Liabilities
Current Borrowing $100,000
Long-term Liabilities $200,000
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $126,500
Total Liabilities $426,500

Capital
Planned Investment
Owner $200,000
Investor $300,000
Additional Investment Requirement $0
Total Planned Investment $500,000

Loss at Start-up (Start-up Expenses) ($476,500)


Total Capital $23,500

Total Capital and Liabilities $450,000

Total Funding $926,500

8.3 PERSONNEL PLAN


The Personnel Plan reflects the staffing levels required to create the Mobile Content, central
database, and establish the customer base needed to achieve the revenues projected and
reach profitability.

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Ding Wei Yee (1071200152) 10/30/2007

Personnel Plan
Year 1 Year 2 Year 3
Production Personnel
People 5 5 5
Average per Person $18,000 $18,000 $18,000
Subtotal $90,000 $90,000 $90,000

Sales and Marketing Personnel


People 5 5 8
Average per Person $30,000 $30,000 $30,000
Subtotal $150,000 $150,000 $240,000

General and Administrative


Personnel
People 2 2 2
Average per Person $12,000 $12,000 $12,000
Subtotal $24,000 $24,000 $24,000

Research & Development


Personnel
People 2 2 2
Average per Person $18,000 $18,000 $18,000
Subtotal $36,000 $36,000 $36,000

Total People 14 14 17

Total Payroll Expenditures $300,000 $300,000 $390,000

8.4 ASSUMPTIONS
The financial plan depends on important assumptions. The key underlying assumptions are:

1. We assume a slow-growth economy, without major recession.

2. We assume of course that there are no unforeseen changes in technology to make


products immediately obsolete.

3. We assume the continued move towards convergence technology in the Information


Industry.

4. We assume there will not be an economic crash that would greatly hinder our target
market's access to their personal luxury finds.

8.5 KEY FINANCIAL INDICATORS


The Benchmark Comparison chart highlights our ambitious plans to correct declining gross
margin and inventory turnover. The chart illustrates why we think the ambitious sales
increases we plan are reasonable. We have had similar increases in the recent past.

The following chart shows changes in key financial indicators: sales, gross margin
and operating expenses. The growth in sales goes above 20% for the second year in a row, but

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Ding Wei Yee (1071200152) 10/30/2007

then settles. We expect to keep gross margin higher than before, but our projections show a
slight decline as we go into new product areas and anticipate new competition.

As shown in the Benchmarks chart below, our key financial indicators are:

 Projected Sales: Projections are based on actual past performance, and are
conservative. We will increase sales at an average rate of 5-10% per year.

 Gross Margins

 Operating Expenses: Operating expenses are based on providing our employee-


owners with above average wages and benefits, and providing superior customer
service. Expenses are projected to increase at the rate of 6% per year.

Benchmarks

2.0
1.8
1.6
1.4
1.2 Y ear 1
1.0 Y ear 2
0.8 Y ear 3
0.6
0.4
0.2
0.0
Sales Gross Margin% Operating Expenses

8.6 BREAK-EVEN ANALYSIS


TheStarMobile revenues are generated from Product and Services sales (a onetime expense)
and access charges or subscription (a monthly recurring fee). Given this, the break-even
formula must be adjusted to reflect both one time and recurring revenue activities. Using the
sales forecast as a guide, and based on estimates made for fixed cost, average revenue per
product unit and access charges, variable cost for unit manufacturing and service fees, the
break-even volume was established to be 700 units per month with a subscription base of
6,800. We anticipate achieving break even in Year 4 as detailed in the graph below.

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Ding Wei Yee (1071200152) 10/30/2007

Break-even Analysis

Monthly Units Break-even 2,095


Monthly Revenue Break-even $227,265

Assumptions:
Average Per-Unit Revenue $108.47
Average Per-Unit Variable Cost $32.22
Estimated Monthly Fixed Cost $159,750

Benchmarks

$100,000

$50,000

$0

($50,000)

($100,000)

($150,000)

($200,000)

0 600 1200 1800 2400 3000


Monthly break-even point

Break-even point = where line intersects with 0

8.7 PROJECTED PROFIT AND LOSS


Based on the realistic sales projections and efficient cost control measures in
place, TheStarMobile will achieve profitability in just over two years. Company profits in
subsequent years will increase in the years due largely to the exponential growth of the
access charges. Gross margins reveal dramatic growth, again because of the growth in
revenues from access charges.

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Ding Wei Yee (1071200152) 10/30/2007

Profit and Loss


Year 1 Year 2 Year 3
Sales $1,217,851,278 $2,435,296,036 $51,953,417
Direct Costs of Goods $361,793,325 $723,485,020 $8,118,610
Production Payroll $90,000 $90,000 $90,000
Other Costs of Goods $0 $0 $0
------------ ------------ ------------
Cost of Goods Sold $361,883,325 $723,575,020 $8,208,610

Gross Margin $855,967,953 $1,711,721,017 $43,744,807


Gross Margin % 70.29% 70.29% 84.20%

Operating Expenses

Sales and Marketing Expenses


Sales and Marketing Payroll $150,000 $150,000 $240,000
Advertising/Promotion $600,000 $600,000 $600,000
Other Sales and Marketing $120,000 $120,000 $120,000
Expenses
------------ ------------ ------------
Total Sales and Marketing $870,000 $870,000 $960,000
Expenses
Sales and Marketing % 0.07% 0.04% 1.85%

General and Administrative


Expenses
General and Administrative $24,000 $24,000 $24,000
Payroll
Marketing/Promotion $300,000 $300,000 $300,000
Depreciation $3,000 $3,000 $3,000
Utilities $180,000 $180,000 $180,000
Insurance $60,000 $60,000 $60,000
Payroll Taxes $24,000 $24,000 $24,000
Other General and Administrative $120,000 $120,000 $120,000
Expenses
------------ ------------ ------------
Total General and Administrative $711,000 $711,000 $711,000
Expenses
General and Administrative % 0.06% 0.03% 1.37%

Research & Development


Expenses:
Research & Development Payroll $36,000 $36,000 $36,000
Consultants $180,000 $180,000 $180,000
Research & Development $120,000 $120,000 $120,000
Expenses
------------ ------------ ------------
Total Research & Development $336,000 $336,000 $336,000
Expenses
Research & Development % 0.03% 0.01% 0.65%
------------ ------------ ------------
Total Operating Expenses $1,917,000 $1,917,000 $2,007,000

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Ding Wei Yee (1071200152) 10/30/2007

Profit Before Interest and Taxes $854,050,953 $1,709,804,017 $41,737,807


EBITDA $854,053,953 $1,709,807,017 $41,740,807
Interest Expense $30,000 $30,000 $30,000
Taxes Incurred $256,206,286 $512,932,205 $12,512,342

Net Profit $597,814,667 $1,196,841,812 $29,195,465


Net Profit/Sales 49.09% 49.15% 56.20%

Profit Monthly

$70,000,000

$60,000,000

$50,000,000

$40,000,000

$30,000,000

$20,000,000

$10,000,000

$0

8.8 PROJECTED BALANCE SHEET


Our Projected Balance Sheet shows we will not have any difficulty meeting our debt
obligations as long as our revenue projections are met.

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Ding Wei Yee (1071200152) 10/30/2007

Balance Sheet
Year 1 Year 2 Year 3
Assets

Current Assets
Cash $662,260,419 $1,923,344,319 $1,825,799,159
Other Current Assets $100,000 $100,000 $100,000
Total Current Assets $662,360,419 $1,923,444,319 $1,825,899,159

Long-term Assets
Long-term Assets $250,000 $250,000 $250,000
Accumulated Depreciation $3,000 $6,000 $9,000
Total Long-term Assets $247,000 $244,000 $241,000
Total Assets $662,607,419 $1,923,688,319 $1,826,140,159

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities
Accounts Payable $64,342,752 $128,581,840 $1,838,215
Current Borrowing $100,000 $100,000 $100,000
Other Current Liabilities $126,500 $126,500 $126,500
Subtotal Current Liabilities $64,569,252 $128,808,340 $2,064,715

Long-term Liabilities $200,000 $200,000 $200,000


Total Liabilities $64,769,252 $129,008,340 $2,264,715

Paid-in Capital $500,000 $500,000 $500,000


Retained Earnings ($476,500) $597,338,167 $1,794,179,979
Earnings $597,814,667 $1,196,841,812 $29,195,465
Total Capital $597,838,167 $1,794,679,979 $1,823,875,444
Total Liabilities and Capital $662,607,419 $1,923,688,319 $1,826,140,159

Net Worth $597,838,167 $1,794,679,979 $1,823,875,444

9.0 CONTROL
TheStarMobile Marketing Plan serves as a guideline for the company and needs constant
monitoring using analytical tools in the following regards:

 Sales: Weekly, Monthly, Yearly


 Google Analytics: Daily
 Expenses: Monthly
 Customer Satisfaction
 Innovation of new products and services

9.1 MARKETING ORGANIZATION


TheStarMobile Marketing Director Ding Wei Yee will be heading the marketing initiatives.

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Ding Wei Yee (1071200152) 10/30/2007

9.2 CONTINGENCY PLANNING


TheStarMobile De-Risk Model after anticipating the future challenges for the company:

 De-Risk Model

o Value Innovation on products and services to make a leap in value for


Mobi.SOL and to make other competition irrelevant

o Keep innovating in-line with new technologies

31