DEVELOPING MARKETING STRATEGIES AND PLANS. Sample Marketing Plan 1.0 Executive Summary Pagasus Sports International isa start-up aftermarket inne skat- ing accessory manufactur. nine skates have four or five whoals arranged in a single Ine and are ofton caled Rolerblades by the general public after one of the early pioneers in the category In addition to the aftermarket products, Pegasus is developing ‘SkateTours, a service that takes cients cut, in conjunction with a local skate shop, and provides thom with an afternoon of skating using inne skates and some of Pegasus's other accessovies such as SkateSaib. The aftermarket skate accessory markst has been largely ignored. though thore are saveral major manufacturers of the skates themsches, the accessory market has not been addressed. This provides Pegasus with an extraordinary opportu- nity for market growtn. Skating is @booming sport. Curent, most ofthe skating is rreatonal. The ae, however, a growing nurn- ber of sating competitions, including team-oriented compattions such as skate hockey as wel as indvidual competitions such as speed skate racing. Pegasus will wrk to grow these markets anc velop the skate transportation matket, a more utilitarian use of seating Pegasus has outlined a go-to-market marketing program that combines highly relevant products and services with an evolving irect-o-consumer dstribution strategy to tap into customer pas- sions and loyaty. 2.0 Situation Analysis Pogasus is ontring ts frst yoar of operation. Its products have bbeen well received, and marketing will be key to the develop ment of brand and product awareness as well as the growth of the customer base. Pegasus Intsmational oles several diferent aftermarket skating accessories, serving the growing inine skating industry. CHAPTER 2 8. Pegasus Sports International 2.1 Market Summary Pegasus possesses good! information about the market and knows a great deal about the common attributes of the most pprzed customer, This information wil be leveraged to better Understand who is served, what their specific needs are, anc how Pegasus can better communicate with them. Target Markets Recreational Finass Speed Hockey Extreme 2.1.1 Market Demographics ‘Tho profil for tho typical Pagasus customar consists ofthe folow- ing geographic, demographic, and behavior factors: Geographies 1m Pogasus has no sot geographic targot area. By lovorag- ing the expansive teach ofthe Internet and maitiple delvery setvioes, Pegasus can serve both domestic and international ‘customers. 1m The total targeted population is 31 milion users. Demographics 1m There is an almost equal ratio between male and female ‘= Ages 12-46, with 48 percent clstering around ages 22-24, ‘The recreational users tend to cover the widest age range, TABLE 24 Target Market Forecast Potential Customers Growth 2015 2016 2017 2018 2019 aan” Recreational 10% 19,142,500 21,086,790 23,162.42 «25478.66B —28,026835 10.00% Fines te% 6.870000 7,843,000 gora4e0 10,972,368 11,928,208 15.00% Speed 10%, 387,500 176,260 468.875, 918,768 967,339 10.00% Hockey 6% 2.480.000 «2,628,800 2.785528 = 2.983,720 130.948 8.00% Btteme 4% 2.17000 «2.285.800 «2847072 «2440955 2.58593. Total 108% —31,000000 34,211,600 37.786350 1761474 46,191,693 10.48% a re ale84 PARTI including young users through active adults. The fitness users tend to be ages 20-20. The speed users tend to be in their late 20s and early 30s. The hockey players are generally in their toons through that early 20s. The extrome sogment is of similar age to the hockey players. 1m Of the users who are over 20, 65 percent have an undergrad: uate degree or substantial undergraduate coursework. ‘= The adult users have a median personal income of $47,000. jehavier Factors 1m Users enjoy ftness activites not as a moans for a healthy Ife but as intrinsically enjoyable activites in themselves, 1m Users spend money on gear, typically sports equipment. 1m Users have active estes that include some sort of recre- ation at least two to three times a week. 2.1.2 Market Needs Pegasus is providing the skating community with a wide range ‘of accessories for all variations of skating. The company seeks to fulfil the following benefits that are Important to Its ‘customers: = Quality craftsmanship. The customers work hard for their money and do not enjoy spending it on cisposable prod- ucts that work for only a year or two. = Well-thought-out designs. The skating markot has nat been addressed by wal-thought-out producis that serve skaters’ needs. Pegasus's industry experience and personal docication to the sport will provide it with the nooded informa- tion to produce insightuly designed products. = Customer service. Exemplary service is requirad to bul a sustainable business that has a loyal customer basa. 2.1.3 Market Trends Pegasus will distinguish itself by marketing products not previ- ‘ously available to skaters. The emphasis in the past has been to sell skates and very few replacement pars. The number of skaters, isnotresticted to any one single country, continent, or age group, so there is @ world market. Pegasus has products for vitually ‘every group of skaters. ‘The fastest-growing segment ofthis sport is the finess skater (Table 2.4). Theratoro, the marketing is boing droctod toward this ‘group. BladeBoots wil enable users to enter establishments with ‘ulthaving to remove thet skates, BladeBoots will be aimed atthe recreational skater, the largest segment. SkateAids, on the other hand, are great for everyone. The sport of skating will also grow through SkateSailng ‘This sport is primarily for the medium-to-advanced skater, and its growth potential is tremendous. The sails that Pega- ‘sus has manufactured have been sold in Europe, folowing a pattem similar to windsurfing. Windsailng originated in Santa Monica but did not take off unti it had already grown big in Europe. ‘Another tend is group skating. More and more groups are gotting together on skating excursions in ces al over the word UNDERSTANDING MARKETING MANAGEMENT For example, San Francisco has right group skating that atracts hundreds of people. The market trends are showing continued growth in all dections of skating 2.1.4 Market Growth With the price of skates going down due to compton by so. many skate companies, the markot has had steady growth throughout the wotld, although sales have slowed down in some markets. The growth statistics for 2018 were estimated to be about 31 millon units. More and more people are discovering— and in mary cases rediscovering —the health benefits and fun of skating, 2.2 SWOT Analysis ‘The following SWOT analysis captures tho key strengths and ‘weaknesses within the company and describes the opportunities and threats facing Pegasus. 2.2.1 Strengths 12 r-dopth industry exceiance and insight 1 Creativ yot practical product designers i= The use of a highly efficent, flexible business model utizing dlrect customer sales and cistrbution 2.2.2 Weaknesses 1= The roiance on outside capital necessary to grow the business = Alack of retailers who can work face to face with the customer to gonarate brand and product awaranoss i= The difcuty of developing brand awareness as a start-up company 2.2.3 Opportunities 1 Periipaton within growing industry 1 Decreased product costs through economies of scale. = The abifty to leverage other industry particnants’ marketing efforts to help grow the general market 2.2.4 Threats '= Future/potential competion from an akeady-establshed market participant '= A continued slump in the economy that could have a nega- tive effect on people's soending of discretionary income on ‘itness/recreational products = The release ofa study that cals into question the safety of skating or the inabilty to prevent major skating induced traumas 2.3 Competition Pegasus Sports International is forming its own market, Although there are a few companies that do make sails and fol that a few skaters aro using, Pegasus is the only brand that is truly designod for and by skaters. The few compatitors’ sails on the market areDEVELOPING MARKETING STRATEGIES AND PLANS not designed for skating but for windsurfing or for skateboards. In the case of fols, storage and carrying are not practical, There are different indirect competitors who are manufacturers of the ‘actual skates. Aftor many years in the market, theso companies have yet to become drect competitors by manufacturing acces~ sories for the skates thet they make, 2.4 Product Offering Pegasus Sports International now offers several products: 1m Tho fist procuct that has bean developed is BladeBoots, ‘cover for the wheels and frame of inine skates, which allows skaters to enter places that normally would not allow them in with skates on. BladeBoots come with a small pouch and bal that convrts to a woll-designed skato 1m The second product is SkateSals. These sails are spectically designed for use while skating. Feedback that Pegasus has, received ‘rom skaters indicates skatesaling could become a very populer spor. Trademarking this product is curently in progress. 1= The third product, SkateAid, will bein production by the end, ofthe year. Other ideas for products are under development bbut wil not be cisclosed unti Pegasus can protect them ‘through pending patent applications. 2.5 Keys to Success The keys to success are designing and producing products that ‘mest market demand, n adition, Pegasus must ensure total cus- tomer satisfaction. If these keys to success are achioved, it will become a profitable, sustainable company. 2.6 Critical Issues As a start-up business, Pogasus is stil in the early stagos. The crtical issues are for Pegasus to = Establish itsel{ as the premier skating accessory company. 1= Pursue controlled grows that dictates that payroll expenses, will never exceed the revenue base, This will help protect against recessions. '= Constantly monitor custamar satisfaction, ensuring that the ‘growth strategy will never compromise service and satisfac tion levels. 3.0 Marketing Strategy ‘The key to the marketing strategy is focusing on the speed, heath and finess, and tecrealonal skaters. Pogasus can Cover about 80 poroont of the skating market because I pro- ciuoes products gosred towers cach segment. Pagasvs i= fable fo adress al ofthe diferent segments within the marc because, although each segments distinct in terms of te users and equipment ts products are usotul to al ofthe cflorant segments 3.1 Mission Pegasus Sports Internationals mission isto provide the customer with the finest skating accessories available. "We exist to altract CHAPTER 2 88. ‘and maintain customers. With a stict acherence to this maxim, success will be ensured. Our services and products will exceed the expectations ofthe customers.” 3,2 Marketing Objectives 1 Maintain postive, stong growth each querer notuithstand- ing seasonal sales patterns), w= Actiove a steady increase in market penetration 1 Decrease customer acqustion costs by 1.5 petcent per quarter 3.3 Financial Objectives 1& Increase the profit margin by 1 petcent per quarter through ficiency and aconomy-o-scale gains, '= Maintain a signiticant research and development budget (@s a percentage relative to sales) to spur future product developments, 1 Achieve a double- to triple-digit growth rate for the frst three years, 3.4 Target Markets With a projected world skating market of 21 milion that is steadily ‘growing (statistics released by the Sporting Goods Manufactur- {rs Association), the niche has been created. Pegasus’ aim is to ‘expand this market by promoting SkateSailng, a new sport that 's popular in both Santa Monica and Venice Beach in California, The breakdown of participation in skating is as fofows: 1+ porcent ‘speed (growing), 8 percent hockey (dectning), 7 percent extreme/ aggressive (declining), 22 percent fitness (nearly 7 milion—the fastest growing), and 61 porcont recreational st-timers). Poga- ssus's products are targeting the fitness and recreational groups because they are the festest growing. These groups are gearing themselves toward health and fitness, and combined they can ‘easily grow to 85 percent (or 26 milion) of the market in the next five yours. 3.5 Positioning Pegasus wil positon itself as the premier aftermarket skating accessory company. This posiioning wil be acheved by laverag- ing Pogasus's compatitiv edgo: industry exparionce and passion. Pegasus is a skating company formed by skaters for skaters. Its management is able to use its vast experience and personal passion or the sport to develop innovative, useful accessories for fa broad rango of skaters 4.0 Marketing Tactics The single objective of the marketing program is to positon Pegasus as the premier skating accessory manufacturer, serv- ing the domestic market as well a the international mavkst, The rmavketing program wil seek to first create customer awareness concamning the offerad products and sarvices and than develop the customer base. Specifcaly, Pegasus's marketing program is composed ofthe folowing approaches to product, pricing, dsti- bution, and communications.part | UNDERSTANDING MARKETING MANAGEMENT 4.1 Product Several of Pegasus’s currently developed products have pat fenls pending, and local market research indicates that there is great demand for these products. Pegasus will achieve fast, significant market penetration through a solid business model, Iongcrange planning, and a strong management team that is abe to execute this exciting opportunity. The three principals on the management team have more than 20 years of combined personal and industry experience. This extensive experience provides Pegasus with the empirical information as well as the passion to provide the skating market with much-needed atter- market products. 4.2 Pricing ‘This wil be based on a per-product real price. Because of the advantages of seling directly, higher margins can be achioved ‘with premium pricing that wil stil appeal to customer segments 4.3 Distribution Pegasus wil soll its products initially through its Web site, In ad- dition to allowing for higher margins, this drect-o-the-consumer approach wil alow Pegasus to maintain a close relationship with customers, which is essental for producing products that have 4 true market demand. By the end of the year, Pegasus also will hhave developed relationships with diferent skate shops and will begin to sel some ofits products through retallr. 4.4 Communications ‘Tho mossage that Pogasus will sock to communicate is that it offers the best-designed, most useful skating accessories. This message will be communicated through a variety of methods. The fist wil be the Pegasus Web site, which wil provide a rich source ‘of product information and offer consumers the opportunty to purchase. A lot of tme and money will be vested in the site to provide the customer with the perception of total professionalism and uty for Pegasus’ products and services. ‘The second marketing method wil be advertisements placed in numerous industry magazines. The skating industry is sup- ported by several different glossy magazines designed to pro- mote the industry as a whole. In addition, a number of smaller periodicals serve the smaller market segments within the skating industy, The last method af communication is tha use of printed) ‘alos literature. The two previously mentioned marketing meth- ‘is wll create demand for the sales literature, which willbe sent ‘out to customers. The cost of the sales literature will ba falrly minimal because it wil uso the aready-compilad information trom the Web site 4.5 Marketing Research Pegasus is blessed with the good fortune of being located in the canter of the skating world: Venice, Calfornia, It will be abl to leverage this opportune location by working with many of the dt ferent skaters who lve in the area. Pegasus was able to test all Of its products not only with its principals, who are accomplished skaters, but also with the many other dedicated and “newbie” TABLE 25 Monthy Units Brosk-Ev0n 8 Monthy Sales Break Evan $7,760 Assumptions: ‘Average Pari Revenue $175.62 Average Par it Variable Cost $2261 Estimated Monthy Feed Cost $9368 Users located in Venice. The extensive product testing by a wide varity of users provided Pegasus with valuable product feedback and has led to several design improvements. 5.0 Financials This section will ofer the financial overviaw of Pegasus related to marketing activities. Pegasus will address break-even analysis, sales forecasts, and expense forecast and indicate how these activities link to the marketing stratogy. 5.1 Break-Even Analysis ‘The break-even analysis (Tablo 2.6) inclicates that $7,760 will bo required in monthly sales revenue to reach the break-even point. 5.2 Sales Forecast Pegasus feels that the sales forecast figutes are conservative It wil steadily increase sales as the advertising budget allows. ‘Athough the target market forecast (Table 2.4) stad all of the po- ‘ential customers divided into separate groups, the sales forecast (Table 2.6) groups customers into two categories: recreational and ‘compallve. Reducing the number of categories alows the reader to quickly cisco information, making the chart more functional TABLE 26 Sales 2015 2016 2017 Pecraatinal $455,740 $598,877 $687,765 Compete $7918 $9582 $110,942 Total Sales $78,658 $694ea7 $797,807 DirectGost of Sales 2015 2016 2017 Recreational $920%3 $107,798 $123,798 Compt $13,125 $17,208 $19,808 Subtotal CostofSabs $95,158 «$125 086 $143,608, 5.3 Expense Forecast ‘The expense forecast willbe used as a toolte keep the department 'n target and provide indicators when corrections/modifications 2ar9 needed forthe proper implementation of the marketing plan.DEVELOPING MARKETING STRATEGIES AND PLANS | CiAPIER? a7 6.0 Controls ‘The purpose of Pagasus's marketing plan is to serve as a guide for the organization. The folowing areas will be monitored to gauge performanes: 1m Revenue: monthly and annual = Expenses: monthly and annual rase27 fy PI ‘Milestones Start Date End Date Budget Manager, Department Marketing pin pleton vans anne so Sin Naretrg We st completo vans ansns $70,400 ‘ut tm Natta tversng campaign # wns ears $300 sian Marg hovering camein #2 anns rasan $4590 sta Narra Development of the real ebane wns rwa0rs $0 san Marketng Tote $28,450 1 Customer satistacton TABLE 28 1 Now. product dovelopment 218 = 16 ~—2017-—|——«6.1 Implementation The milestones identiy the key marketing programs (able 2.7) 0 1,00 Wi Ste $2500 $ $000 $ 10.000 It is important to accomplish each one on time and on budget ovciament $ 8050 $1590 $2000 | rane >) Prod Matra $1725 $ 2000 § 3000 Toll Sales ard arietng $4779. $ 25000 $ 32000 | 6.2 Marketing Organization rere Stan Blade will be responsible forthe marketing activites. PeoanSales 650% S60 Centon Marin 398725 $644,652 $821,202 | 6.3 Contingency Planning Contton MrainvSsbs 75.42% —7840% 7.86% | Bieteutties and Risks = Problems gonerating vsbilty, a function of being an Internat based start-up organization = An entry into the market by an already-established market competitor Worst-Case Risks 1 Determining thatthe business cannot sunport itself on an ‘ongoing basis 1& Having to liquidate equipment or intallctual capital to cover labios Sere: fea sarlsh poedyandcenratndy Fa ata, be, rama carpi ana rag plas tones Raid byporissn fale te Stwae