Marketing Plan : The 3C Cigar Bar

- Group 4 Marketing Plan, Nov 29. 2010 -

Robert Gregić 20081671, 박제홍 Chris 200601322, 윤세일 Dominic 200702145
김영재 Dunn 200600576, 박진영 Justin 200701425, 조준환 Jun 200603228
이주호 Joe 200702602

1 Executive Summary
The 3C is a cigar bar is a closed members club, where members can enjoy top class cigars, directly
imported from Cuba. Although The 3C is known for its specialty in procuring the best cigars, and
keeping them in optimum condition, members can also enjoy the luxury of top class coffee, rum, and
Cognacq along with the cigars in plush table settings, carefully arranged to provide private spaces
for relaxing, celebrating, or even holding business meetings. While cigar bars in Seoul have been
serving as an open cigar store, with some only consisting of a conditioned storage space and a
counter, The 3C aims to provide a space where members can actually enjoy the cigars they
purchased. While cigars are drawing ever more attention as a luxury good among the wealthy, most
bars or cafes are not equipped with ventilation systems that can effectively take out cigar smoke, and
thus not appropriate for enjoying cigars. Another profit model the The 3C is preparing includes
sharing its target market with other companies that have interest in the high-end market. The The 3C
will host promotional events in collaboration with brands like Lamborghini, LV, and Blackberry to
offer exclusive deals to its members and provide access to its exclusive members for a
commission.The 3C will start with a limited, open invitation for the first season, and convert to
exclusive membership when this promotional period ends. New members will require invitations
from existing members for registration. The 3C will become a social scene for the upper class,
building the image of a leaders club where all the important people are, and where all the important
social events are hosted. On top of that, The 3C will be the place where you can find good cigars,
good service, and good people.

2 Situation Analysis
The 3C cigar bar is preparing the opening of the first bar and store in Seoul. Its products are high
quality cigar, premium liquor, and top class coffee considered as a luxurious goods for the upper-
class. In addition, it provides private places for the members so that The 3C cigar bar will be an icon
of top celebrities' gathering. The quality of products and well-managed membership system will be
the key element of success of this business.

2.1 Market Summary

The information below is for a better understanding of The 3C cigar bar's marketing strategy.
The information consist of target markets, market demographic, market needs, trends and market
growth.

 Target Markets
 The high-income bracket and celebrities who have interest in enjoying high quality
Cuban cigars, premium liquors, and the coffees.
 The private group which needs their personal places for gathering, relaxing and having a
part.
 The upper class individuals who want to make more personal connections among the
other tops.
 Market Demographics
The specific information of the The 3C cigar bar's customer is below.

 Geographics
 The geological target market is limited. The 3C cigar bar will be located in Seoul,
Gangnam-gu, so its target customers are the one who lives around the Seoul city.
  About half of the high-income people in South Korea who earn more than 100,The
3C,The 3C won in a year lives Gangnam-gu. (KOSIS, 2004)
 The 34.7% of the high-income people who live in a luxurious house and have an
imported high quality of Seadan (over 3The 3CC) lives in Sangnam-gu.
 In 2009, the total sale of imported cigars in Seoul was 10,875,The 3C packs. Compared
to the other big cities in South Koreasuch as Pusan - 2,364,The 3C or Incheon 2,521,The
3C, the consumption of imported cigars in Seoul is much higher.

 Demographics
 The smoking rate of male is 47%, it means about half of the Korean males are smoking.
Unlike the male, the smoking rate of female is just 7%. (KOSIS, 2008).
 In 2005, the smoking rate in age structure, from age 19 to 29 - 31.9% (male 52.3% /
female 5.8%), 30 to 39 - 33% (60% / 4.5%), 40 to 49 - 30.8% (55.2% / 5.2%), 50 to 59 -
27.2% (47.6% / 6.8%), 60 to 69 - 19.7% (38.3% / 3.5%).
 The top 10 percent’s earning profit for each in one year is 10,386,The 3C won.
 Behavior Factors
 There are many gatherings especially at the end of the year named "mangneonhui" , an
year-end-party.
 Koreans are likely to have private community such as alumni reunion, regional
meetings, apartment meetings, hobby-clubs, web communities, business workshops.
 The celebrities do not want to be seen in the public when they are not on the work
schedule, so they are trying to find some places which offer privacy.
 Market Needs
The 3C cigar bar will provide the high quality cigars, premium liquors, and coffees.
Moreover The 3C cigar bar will meet the needs of the upper-class people, keep privacy and
help in building personal networks within the club.

 New cigar products: Now, there is just one supplier who imports the cigar to korea, and
The 3C cigar bar will diversify the supply chain by importing cigar form the other
countries. It will fulfill the needs of original cigar smokers who wants to taste the new
and strange cigars.
 The quality: Keeping cigar needs the knowledge. Without proper keeping, the product
will be damaged and it will remove the taste of the cigars. The 3C cigar promises to
prevent these problems by instructing the employees regularly.
 The services for the customers: The 3C cigar bar will be running under the closed
membership system. It is a differentiated service which provides the keeping privacy of
personal.
 Above all the factors, The 3C cigar bar will be an icon of the high society.
 Market Trends
 Now days in South Korea, unlike in the past, an image ofcelebrity is becoming more
important. After the web-service is commercialized, this social phenomenon is getting
spread across the country. Therefore, the politicians, top stars, the CEOs are hesitant to
be seen to the public so it is hard to find some places for their gathering.
 In modern society, personal networks are one of the key to success. Especially, the high
classes want to broad the networks for their business or personal satisfaction. The The
3C cigar bar is expected to meetthese needs by establishing personal data system and
matching them.
 The incomes of the top 10 percent’s are getting higher. Their disposable incomes are
going higher, so they want to enjoy opulent life style. Also, because of the trend,
importance of happy life, they will not hesitate to spend more money on our products.
 Market Growth
Now, in the market, there is just one supplier and some retailers. What we expect is the
needs of the celebrities are increasing, but the supply is not enough to fulfill this. Especially,
there are not many cigar bars which have closed membership, so The 3C cigar bar will be
one of the market pioneers.
 The smoking ratio and total sales of cigars (including popular, low priced one) is falling
down, (in 1990, from 3,225 cigars per person, to 1,673 cigars in 2008), because of the well-
being trend. However, half of the males are still smoking and the specialty of our services,
we expect this business will be growing, despite of the decreasing of smoking ratio.

2.2 SWOT Analysis

The following SWOT analysis captures key internal strengths and weaknesses, as well as
external opportunities and threats to The 3C cigar bar.

 Strengths
 There is strong demand on the market especially within the upper-class people who want
to smoke luxurious high quality Cuban cigars. There are also places which offer these
cigars, but the business items
 Upper-class and celebrities must nurture image of high integrity, while
smokingluxurious cigar could be harm their image. By running a close-limited
membership, we can offer safe place for their privacy. Also, it could be worked as a
social club for the upper class.
 Weaknesses
 Initial investment costs are high, thus putting a high risk on the future of the business.
 Before successfully building customers' loyalty and sufficient number of customers,
business won’t reach break-even point.
 Opportunities
 Most competitors are not running closed-membership.
 The prices of normal cigar are going up, there rarely seems to be a prices gap between
normal and luxurious cigar.
 Threats
 The rate of smokers is falling down because of well-being trend, and many
"stop smoking" campaigns.
 Awareness of luxurious cigar is not high; most South Koreans still think this kind of
products are
for only for really high income people.

2.3 Competition
Luxury cigar market in Seoul is sizable with the tendency of the growing competition. There are
numerous distributors who offer a limited range of high quality Cuban cigars. All competitors
are approved distributors of the company Pierre Ltd., who is exclusive distributor of Habonos
Cigar Brands to South Korea. While most of the competitors only offera high quality Cuban
cigars, there are some clubs (mostly located in bars at 5 star hotels in Gangnam-gu) who offer
extra service for its customers. We recognize them as key competitors.

Key competitors:
 The Cigar Club of Seoul. It isexclusive “Members-Only” cigar divan that offers
premium cigars and wine. They provide private and scheduled tasting for their members,
magazines and place for business meeting, members-only discount on smoking
accessories, and the modernist design club space.
 Cigar Divan.The Havana Cigar Divan and Bar at the Grand Intercontinental Hotel near
the COEX in Gangnam offers a full range of Cuban cigars, mini cigarillos and high-end
cigar accessories. This cigar boutique is a part of the La Casa del Habano franchise, the
retail division of Habanos S.A.
 Silk Road Club. Silk Road Club is a restaurant at Grand Intercontinental Hotel which
offers Cuban cigars and brand drinks, as well as panoramic view from the 34thfloor,
contemporary and stylish ambiance, innovative cuisine and live performances along
with hotel's prestigious service for all club members or the guests of the hotel.
 Sky Longue. Sky Longue at COEX Intercontinental in Gangnam offers high-quality
 Cuban cigars, cocktails and modern cuisine in aviation inspired ambience, private
meeting rooms and panoramic view of the city skyline form 30th floor.
 The Timber House.The Timber House bar at Hyatt Park Seoul in Gangnam offers high-
quality Cuban cigars, huge variety of premium beverages from the Whisky Bar, the
Cocktail Bar and the Sake / Soju Bar. Sushi, sashimi and snacks are also offered. Live
entertainment featuring an internationally renowned vocalist and Korean jazz band.

Despite strong competition, The 3C bar can build its brand and gain recognition
among targeted segments.Our bar offer high quality cigars and places the
experience of enjoying cigars on the first place, while most of the key competitors
offer them as an extra offer or service. Furthermore this is clear distinction
between our bar and other competitors which open us opportunity to build our
unique brand image.

Competitor Location
Blush Grand Intercontinental Hotel, Gangnam-gu, Seoul
Ritz-Deli Ritz Carlton Hotel, Gangnam-gu, Seoul
Lobby Bar Coex International Hotel, Seoul
The Paris Grill Hyatt Grand Hotel, Yongsan-gu, Seoul
Silk Road Club Grad Intercontinental Hotel, Gangnam-gu, Seoul
The Ritz bar Ritz Calton Hotel, Gangnam-gu, Seoul
ZOE bar Imperial Palace Hotel, Gangnam-gu, Seoul
Sirocco Sheraton Grande Walkerhill, Gwangjig-gu, Seoul
The Bar Imperial Palace Hotel, Gangnam-gu, Seoul
Orchid Room Sofitel Ambassador, Jung-gu, Seoul
Woo Bar W Seoul, Gwangjig-gu, Seoul
CepD’or (Wine Shop) Yeoksam store, Gangnam, Seoul
Myeong-dong store, Jung-gu
Intervine (Wine Shop) Gangnam store, Gangnam-gu, Seoul Shinsa store, Gangnam-gu, Seoul
Hakdong store, Gangnam-gu, Seoul Nonhyun store, Gangnam-gu,
Seoul
Winehouse Nonhyun store, Gangnam-gu, Seoul
Hamilton insam (Tobacconist) Hamilton Shopping Center, Yongsan-gu, Seoul
Smoke-n-darts (Tobacconist) Gyunggi-do, Seoul
Marty’s (Tobacconist) Gyunggi-do, Seoul
Marriott – Maska’s Seocho-gu, Seoul
(Tobacconist)
By the way Premium shops across the Seoul

2.4 Product Offering

The 3C offers top class Cuban cigars, and here are the major brands that will satisfy our
customers:
 Cohiba
 Hoyo De Monterrey
 Partagas
 Montecristo
 Quintero
 Romeo y Julieta
 San Cristobal De La Habana
 Trinidad
 Bolivar
 Fonseca
 Saint Luis Rey
  H. Upmann
 Josa L. Piedra
 Vegas Robaina
 Diplomaticos

2.5 Keys to Success

The keys to success is to provide members with only the best of the best cigars, and keeping the bar
exclusive enough for members to enjoy luxury in privacy.

2.6 Critical Issues

As a newcomer in the growing Cigar market in Seoul, The 3C faces not only
opportunities, but also critical issues to its success which are:
 Forming the initial members, which will shape the cultural nature of the bar, and also
decide how prestigious the membership will be.
 Assuring a steady supply of luxury goods, and minimizing black expenditures, such
as bribes to corrupt officials who oversee the operation at the supplying end of the
luxury goods.

3 Marketing Strategy
The key to our marketing strategy is to give our members the experience they deserve; relaxing,
luxurious, pleasurable environment. We are focusing on our members’ privacy, super-premium
experience, membership, and social network. By spending time in our bar, members can enjoy
numerous luxury goods (cigars, coffee, cognac) with other upper-class fellows like themselves. They
can expand their personal connections.

3.1 Mission
Our main mission is to provide customers with the kind of quality cigars they have never
smoked before. Along with the cigars, we will also be providing drinks that go well with the
cigars. Also, our mission is to give our customers a private space where they can enjoy
themselves without having to look over their shoulders. They will be able to hang out with others
just like themselves in the bar.

3.2 Marketing Objectives

 Gather all the upper-class people of Seoul in our bar.
 Be the one and only place with the best quality cigars, coffee, and cognac for upper class
people.
 To reach break-even point in one year.

3.3 Financial Objectives

 Increase profit margin by 5% per quarter through more word of mouth promotion, and less
advertising.
 Achieve a exponential growth rate by catering for the entire upper class, and expanding the
facility.
 Maintain a fund for expansions that will pay for land purchasing, constructing, and interior
designing expenditures in future expansion projects.

3.4 Target Markets

Obviously, Seoul is the biggest city in South Korea. In Seoul, Gangnam-gu is where most of the
wealthy people are living in currently. These people are our target. They are always looking for
new experiences they can enjoy. Cigars are something that can fulfill their wants. Imported
cigars sell the most in Seoul compared to other big cities in Korea. Also, 47%of Korean men
smoke cigarettes. This means that half the Korean men in Seoul probably smoke cigarettes.
Cigarettes smokers are a potential market for the cigar market.
People always yearn for themselves to be seen as prestige, high class. The ones that actually have the money
to do so, is our target market.

3.5 Positioning
The 3C Bar is “The Place To Be” for the wealthy people of Seoul to enjoy cigars, coffee, and
cognacs. We are positioning ourselves as the Luxury Private Playground. We will be providing
top class services and products to our top class customers. And top class people will be able to
meet other top class people like themselves.

3.6 Strategies
The objective is to position The 3C as a prestigious cigar bar where the prestigious upper
class have gatherings over top class Cuban cigars, and other assisting luxury goods.
The message The 3C will communicate is that it is an strictly exclusive cigar bar that
caters to the needs of the upper class. This will be realized through hard-to-get
membership opportunities, such as accepting new members only when they are
recommended by existing members.
However, initial members will be invited by The 3C itself. Invitations will be sent out to
carefully selected leaders of the upper class.
Once the initial members are in place, they will be allowed to recommend new members,
or take a plus one to the bar to show people who don’t have a membership, how good
the bar is.

3.7 Marketing Mix

 Pricing will be based on per-product retail price, and a membership fee that will
cover operational expenditures.
 Distribution will commence in the one and only 3C.
 Advertising will take place only in luxury magazines, and promotion will take a form
of word of mouth. A careful balance will be taken between advertising and
promotion as to maintain the exclusive and prestigious image of The 3C.
 Customer service will meet the high expectations of the upper class.

3.8 Marketing Research

Important element of the market research is measuring and analyzing customers’ satisfaction
with provided service, as well as their awareness of our and competition brand. This will help us
to determine both efficiency and effectiveness of our marketing activities and provided service.
The 3C cigar bar will be located in the heart of Gangnam district, the gathering place of the most
high income people in Seoul. Therefore The 3C cigar bar has rare opportunity to gather
information about its customers and competition.

4 Financials
4.1 Break-Even Analysis
Break-even analysis(2011) indicates that $27,500 will be required in monthly sales revenue to
reach the break-even point
 ($:USD)
Break Even analysis
Monthly Units Break –even 250
Monthly sales Break -even $27,500
Assumptions
Average Per-Unit Revenue $110
Cognac $150
Wine $100
Cigar $80
Average Per-Unit Variable Cost $26
Cognac $30
Wine $30
Cigar $20
Estimated Monthly Fixed cost of 2011 $21,038

4.2 Sales Forcast

Our cigar bar aims for ‘closed social club’. So, we will forecast our customers into two
categories : Our club member, customer

($:USD)

Sales Forecast

Sales 2011 2012 2013

Club member $168,The 3C $240,The 3C $360,The 3C

Customer $222,The 3C $187,200 $84,The 3C

 Total Sales $390,The 3C $427,200 $444,The 3C

Direct Cost of Sales 2011 2012 2013

Club member $100,984 $111,732 $160,131

Customer $151,476 $446928 $40,033

Subtotal Cost of Sales $252,460 $186,220 $200,164

1.1 Expense Forecast

The expense forecast is a valuable control tool which will enable us to indicate when its
necessary to make corrections during the implementation phase of the marketing plan.

 Milestones
($:USD)
PLAN

Milestones Start Date End Date Budget Manager Department

Marketing plan completion 10/1/10 11/28/10 $0 Dominic Marketing

Web site completion 11/28/10 12/20/10 $ 3,400 Out-sourcing Marketing

'PLUS LAB'

Web site Advertising 1/1/11 3/31/11 $ 600 Out-sourcing Marketing

on Major Portal sites 'Overture'

Development of the retail 11/28/10 12/1/10 $0 Dominc Marketing

channel
(company Pierre Ltd)
Floor Charter Contract 11/28/10 12/1/10 $ 80,The Dominc Marketing
3C
Opening Advertising 1/1/11 1/2/11 $ 2,The 3C Dominc Marketing
Campaign (The Opening (Weekend)
date)
Totals $ 86,The
3C

 Yearly Expense for Basic maintenance

 In the first year of opening, 2011, the cost of Rental cost for charter, and creating
Website are going to be higher.
 From second year, personal expense will be higher.

($:USD)
Marketing Expense budget 2011 2012 2013

$ 54,The 3C(4500*12)
Floor Rental
+ 80,The 3C(Charter fee) $ 55,200(4600*12) $ 56,400(4700*12)
(Yeok Sam, Gangnam-gu)
= 124,The 3C
Web site $ 5700 $ 2300 $ 2300
Personal Expenses (For 4
$ 116160 $ 119700 $ 132The 3C
people)

Building maintenance cost

$ 8400 $ 8820 $ 9264
(Utility bill and the others )

Registration fee
(Including Alcohol License, $ 200 $ 200 $ 200
etc.)

Total maintenance cost $ 252,460 $ 186,220 $ 200,164

1. Personal Expenses (For 4 people); $ 2200 a month for each person, +10% yearly bonus, 3%
increases compared to previous year.
2. Building maintenance fee;5% increases compared to previous year.

Yearly expense for Basic Maintenance

1.2 Yearly Expense for Marketing

 At first year, Web site and Advertisements on the Internet are most effective way of getting
member.
 But our bar takes ‘closed membership’;which is more effective way of focus on the existing
members with services and internal campaigns after some periods. So internet
advertisement will be less important, while other budget for off-line service will more
 heavy in total weight.

Yearly Expense for Marketing

($:USD)

Marketing Expense budget 2011 2012 2013

Web site $ 5,700 $ 2,300 $ 2,300

Advertisements
$ 600 $ 400 $ 400
on the Internet

Advertisements
with campaign
$ 12,The 3C $ 13,The 3C $ 14,500
(ex: Launching party
with Luxury brands)

Total sales and

$ 18,300 $ 15,700 $ 17,200
Marketing Expenses

I need sales Forecast for

Percent of Sales
this!

Contribution Margin

Contribution Margin / Sales

2 Controls
4.3 Implementation
We are planning control measures to closely monitor customer service satisfaction and whether
define milestones are going to be accomplished on time and on budget. Thus, these measures
will enable us to make quick corrections if any problems occur. In order to do that, we will
closely monitor monthly and annually expenses and revenues.
4.4 Marketing Organization
Dominic, chief marketing officer, holds overall responsibility for all of the company’s marketing
activities.