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Radical Downhill

Marketing Plan

123 Mountain Ridge Road Skitown, CO 88000 Phone: 123-456-7890 Fax: 123-456-7890 Email: Rgonsalves@radicaldownhill.com Web Site: www.radicaldownhill.com Contact: Robert Gonsalves

Table of Contents
Executive Summary.........................................................................................................................4
MARKETING OBJECTIVES.................................................................................................................................................4 PRODUCTS OR SERVICES...................................................................................................................................................4 RESOURCES NEEDED.......................................................................................................................................................5 PROJECTED OUTCOMES....................................................................................................................................................5

Company Description......................................................................................................................5 Strategic Focus and Plan..................................................................................................................5
MISSION/VISION.............................................................................................................................................................5 GOALS..........................................................................................................................................................................6 CORE COMPETENCY/SUSTAINABLE COMPETITIVE ADVANTAGES..............................................................................................6

Situation Analysis............................................................................................................................6
INTERNAL FACTORS.........................................................................................................................................................6

Strengths:.................................................................................................................................6 Weaknesses:.............................................................................................................................7
EXTERNAL FACTORS........................................................................................................................................................8

Current Opportunities..............................................................................................................8 Potential Future Opportunities.................................................................................................8 Consumer/Social......................................................................................................................9 Competitive..............................................................................................................................9 Technological...........................................................................................................................9 Economic...............................................................................................................................10 Legal/Regulatory....................................................................................................................10
INDUSTRY ANALYSIS/TRENDS.........................................................................................................................................10 COMPETITOR ANALYSIS..................................................................................................................................................11 COMPANY ANALYSIS......................................................................................................................................................11 CUSTOMER ANALYSIS....................................................................................................................................................12

Demographics........................................................................................................................12 Geo-demographics.................................................................................................................12 Psychographics......................................................................................................................13 Usage and Usage Rate...........................................................................................................13
SWOT ANALYSIS SUMMARY.........................................................................................................................................14

Market – Product Focus ................................................................................................................14
MARKETING AND PRODUCT OBJECTIVES...........................................................................................................................14 TARGET MARKETS........................................................................................................................................................15 POINTS OF DIFFERENCE..................................................................................................................................................15 POSITIONING................................................................................................................................................................17

Creating a Brand Image Online.............................................................................................17 Maintaining Brand Image/Branding Concerns......................................................................17 Marketing Program........................................................................................................................17
PRODUCT AND PRODUCT STRATEGY.................................................................................................................................18

Augmented Product Definition..............................................................................................20
PRICE..........................................................................................................................................................................20

Static Pricing Strategies.........................................................................................................20 Dynamic Pricing Strategies....................................................................................................21

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PROMOTION.................................................................................................................................................................22

Mass Media Sales Promotion Strategy..................................................................................22 Online Sales Promotion Strategy...........................................................................................22 Channel Strategies: Push and Pull.........................................................................................23 Online Promotion/Advertising Objectives.............................................................................23 Mass Media Public Relations Strategies................................................................................23 Mass Offline Communications Strategy................................................................................24 Personal Offline Communications Strategy...........................................................................24 Mass Online Communications Strategy.................................................................................24 Affiliate Programs .................................................................................................................24 Personal Online Communications Strategy...........................................................................25 Viral Marketing .....................................................................................................................25 Generating E-Mail Lists for Advertising and Sales Promotion.............................................25 Online Public Relations Strategies.........................................................................................26 Community Strategic Development.......................................................................................26
PLACE.........................................................................................................................................................................26

Channel Management............................................................................................................27 Data and Projections......................................................................................................................27
SALES FORECASTING METHODS USED.............................................................................................................................27 SALES DATA................................................................................................................................................................28

E-Marketing’s Impact on Traditional Marketing Channels...................................................29
COSTS.........................................................................................................................................................................29 FINANCIAL PROJECTIONS................................................................................................................................................30

Organization...................................................................................................................................30 Implementation Plan .....................................................................................................................31 Website Content.....................................................................................................................31 Traffic Management...............................................................................................................31 Tracking Web Activity...........................................................................................................32
PEOPLE REQUIRED........................................................................................................................................................32 TIMING........................................................................................................................................................................32

Evaluation and Control..................................................................................................................33
MARKETING INFORMATION SYSTEMS NEEDED...................................................................................................................33 CRITERION MEASURES WITH OBJECTIVES.........................................................................................................................34

Appendix A: Biographies of Key Personnel..................................................................................35 Appendix B: Support Material.......................................................................................................36

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Executive Summary
Radical Downhill is an outdoor sporting goods specialty shop focusing on alpine sports. It is located in an artistic mountain community where creativity and innovation are encouraged. Radical Downhill is located ¼ mile from the base lodge of Big Basin, a mountain known as the “Mecca” for radical skiers. Its core market consists of extreme sports enthusiasts, professional skiers and snowboarders and ski area visitors. The store has been in business for ten years and is solvent and profitable. Radical Downhill enjoys excellent word-of-mouth advertising. Rarely does a visitor to Big Basin leave town without first purchasing a Radical Downhill t-shirt or sweatshirt. Radical Downhill seeks to expand its sales by launching an e-tailing website to offer customers custom-made skis and snowboards, car rack systems and locally made arts & crafts. Marketing Objectives Radical Downhill enjoys current gross sales of $1,700,000 per year. Its business is seasonal and most of the money is made in the six-month period from November through April. Radical Downhill has developed a unique relationship with a local manufacturer of custom-made skis and snowboards. Radical Downhill has exclusive distribution rights for these skis and snowboards for a five-year period and an option for another five years. They have other opportunities to market an innovative car rack system and to act as brokers for local artisans. Radical Downhill wants to expand its sales through Internet marketing and intends to focus on the extreme alpine sports niche, the same niche that it serves at its store. Its goal is to increase gross sales by 30 percent in the first year and incrementally in subsequent years. Products or Services Although Radical Downhill stocks hundreds of items in its retail store, it intends to focus its etail efforts on three new opportunities: custom-made skis and snowboards and accessories, an innovative new car rack system and local arts and crafts. The custom-made skis and snowboards are high quality, high performance items. They are the Porsche or Lamborghini of the ski industry. Radical Downhill has contracted with the manufacturer to use the shop name as the brand name. The car rack system is superior to anything on the market, and, through an innovative manufacturing break-through, retails for half the price of the industry leader. It is made of composite materials, effortlessly mounts to a wide variety of cars, vans, and trucks, and makes changing configurations a breeze. Finally, by virtue of its location in an artistic mountain community, Radical Downhill has entered into consignment agreements with local artisans to sell their arts & crafts via the Internet. Some of the most popular items are the trinkets, necklaces, and jewelry made of silver and turquoise. A local artist designed Radical Downhill’s brand symbol, a snowboard featuring a Mohawk haircut and prominent piercing studs.

Resources Needed Radical Downhill is seeking a capital infusion of $200,000 in order to develop, implement, and promote an online website in order to sell these items to the national and international marketplace. This $200,000 loan will be paid back in five years including interest. The company has the management expertise to accomplish the plan but will need to hire outside consultants to develop, debug and post the website. To offload much of the start-up expenses, Radical Downhill plans to completely outsource the development, hosting, and operation of its website. Projected Outcomes We expect to increase our gross sales by $510,000 in the first year. In the second year and beyond, we expect to increase gross sales by between 25 and 30 percent per year. The payback schedule for the $200,000 is five years. In addition to specific financial objectives, we intend to become the premier extreme alpine sports website in North America and the world. Our online e-tail site will also serve to increase traffic to our retail store. By building brand awareness, name, and equity, Radical Downhill desires to become a destination store – one to which its clientele enjoys traveling.

Company Description
Radical Downhill was started in 1991 by cofounders Robert and Julie Gonsalves to cater exclusively to extreme mountain sports enthusiasts. Radical Downhill sells a wide range of skis, boots, bindings, snowboards, clothing, mountain bikes, climbing equipment and accessories. Radical Downhill is a successful specialty shop. Its strengths include its location, its personnel, and its products, and service offerings. In addition, Radical Downhill is profitable and generates a positive cash flow annually. Radical Downhill owns the building (4,000 sq. ft. of retail space) and property for its retail site and has a small outstanding mortgage. Robert and Julie Gonsalves believe that an opportunity exists to expand their trade area through the use of online sales. They want to increase their sales by 30 percent within the next year and incrementally thereafter. They intend to do this by offering custom-made extreme skis, snowboards, car racks and locally made artwork to a global niche market.

Strategic Focus and Plan
This section covers three aspects of corporate strategy that influence the marketing plan: 1) the mission/vision, 2) goals, and 3) core competence/sustainable competitive advantage of Radical Downhill. Mission/Vision The mission and vision of Radical Downhill is to market high-quality mountain sports equipment at competitive prices and to provide exceptional support services to the growing niche of extreme sports enthusiasts while providing challenging and satisfying career opportunities for employees and an above average return on investment for the owners.

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Goals For the coming years, Radical Downhill seeks to achieve the following goals: • Nonfinancial Goals 1. To retain and defend its position as the premier extreme mountain sports retail specialty shop in the western U.S.A. 2. To leverage its reputation and image on a national and international basis through offering its products online through a supplemental Internet marketing effort. 3. To remain on the leading edge of mountain sports technology and customer support services. 4. To become the premier website for extreme sports enthusiasts throughout the world. • Financial Goals 1. To increase gross sales by 30 percent per year over the next three to five years. 2. To maximize shareholder equity for the owners. Core Competency/Sustainable Competitive Advantages In terms of core competency, Radical Downhill seeks to achieve a unique ability (1) to serve the needs of the growing niche market of extreme mountain sports enthusiasts and (2) to provide customers with unparalleled levels of quality-oriented, value-added, customer service. To translate these core competencies into a sustainable competitive advantage, Radical Downhill will work closely with suppliers and employees to ensure that customers receive the highest quality goods and services available in the industry.

Situation Analysis
Radical Downhill seeks to realistically match its internal strengths with market opportunities that it has identified, while simultaneously minimizing its weaknesses and controlling threats from the external environment. Internal Factors Strengths: Radical Downhill’s location is key to its success. It has married its success to the explosive growth in extreme skiing and snowboarding – particularly at Big Basin. It serves two groups of customers: 1) the local extreme skiers and snowboarders and professionals, and 2) vacation skiers and snowboarders. The local extreme enthusiasts are the smaller of the two markets. They generally demand a higher quality of product and service. They are “shop loyal” customers, many of which have purchased their equipment and clothing from Radical Downhill for the past 10 seasons. The vacation skiers are “drop-in” customers who need ski rentals, emergency service or clothing and accessories to make their trip to the mountain more enjoyable. Many of the vacationing skiers are remarkably loyal to the small store.

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Radical Downhill is a family owned business. The owners are former ski instructors who began the shop to service the equipment and clothing needs of their friends. Mr. Gonsalves has an MBA degree and Mrs. Gonsalves has a law degree. A majority of the employees have worked at Radical Downhill for eight years or more. Many are ski instructors or on the ski patrol in addition to working at Radical Downhill. Most are college graduates. The low employee turnover is an asset as it is a plus for customers returning every season to see familiar faces. In addition, because of their length of employment, the employees have in depth product knowledge and experience. Radical Downhill offers high quality ski and snowboard equipment and clothing as well as midlevel and lower-level equipment and apparel for its more price conscious customers. Since it offers high performance equipment, and employs ski instructors and ski patrollers, Radical Downhill has developed a reputation as THE shop for professional skiers, snowboarders, extreme skiers, and those that strive to become either. The owners of Radical Downhill left their high paying corporate jobs in San Francisco to pusue a higher quality of life in this mountain “arts” community. Since resettling in the area a decade ago, they have become fixtures in the local arts and crafts community. Their interaction with the local craftspeople and artisans has blossomed into a business opportunity. They were approached by a local custom ski and snowboard maker and asked to distribute custom-made extreme skis and snowboards to the national and international market. Radical Downhill can make a good margin selling these custom-made items. They have signed a five year contract to be the exclusive distributors of these skis and snowboards, and an option to extend the agreement for an additional five years. Another local manufacturer has made a technological breakthrough in the engineering and manufacturing of an automobile rack system. These racks retail for half the price of the industry leader, are twice as durable, utilize a more efficient method of changing the rack’s setup (can easily change from carrying skis to carrying bikes), and attach to any type of automobile without requiring drilling or customization. Finally, the owners of Radical Downhill have agreed to sell locally made arts & crafts for area artists. These items are for sale on consignment, meaning that when they sell, Radical Downhill receives a percentage of the sales price. Weaknesses: Although Radical Downhill is open for business all year, it is a seasonal business with sales peaking in January and declining rapidly beginning in March. Most of the sales are generated in the six-month period of November to April. Summer sales are mostly to local customers or to seasonal skiers who come to the mountain in the summer to hike or mountain bike. The shop barely breaks even during the off months, and the staffing is reduced to reflect the level of business. Radical Downhill is expanding its selection of mountain bikes to capitalize on the growing demand for bikes and service in the summer months. Even though the business is profitable on an annual basis, its cash flow fluctuates. Each season, the shop relies on credit from its suppliers to replenish stock. Each fall after sales pick up, Radical Downhill pays the summer bills and hires back the seasonal employees. Cash flow is a problem, especially if suppliers refuse to grant credit. In addition, cash flow and profits are reliant on an uncontrollable factor: snow. Even if there is snow at the mountain, many customers
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don’t think of skiing until they see snow in their backyards. In a good season, the mountain has between 100 and 150 ski days. In a bad season, this can go as low as 70 to 80 days. No snow equals no business. A third weakness is the general decline in the number of skiers. In the industrial growth cycle, the ski industry is in maturity or decline. This is mostly because of the high cost of skiing. With lift tickets at $50 or more per day and average ski costs exceeding $400 per pair, middle class families can no longer afford to ski. The cost of a ski weekend for a family of five averages about $1,000 when you include lift tickets, lodging, and food (not including transportation costs). Getting new equipment and clothing for that same family costs anywhere from $2,000 to over $5,000 depending on quality. External Factors Current Opportunities Radical Downhill has an opportunity to be one of the first ski shops to sell custom-made extreme equipment, clothing, and accessories online. Its focus is on the upper income segment of the market. There are currently six competitors offering equipment online. None of the sites offer much product depth – each has only one or two skis for sale in limited sizes. An opportunity exists to become the first site to offer a unique (numbered) series of skis and snowboards to extreme sports enthusiasts internationally. The local craftsman that makes the custom skis and snowboards has agreed to charge Radical Downhill a flat fee for everything produced. Radical Downhill has the freedom to set the retail price. The company that produces the car racks has a Manufacturer’s Suggested Retail Price, but the technology is so advanced and the price so low (50 percent of the industry leader’s price) that it will be easy to sell. The local artisans are offering their artwork through Radical Downhill via consignment. Potential Future Opportunities Given the number of ski shop bankruptcies per season and the resultant liquidation sales, a second opportunity exists for Radical Downhill to enter the discount market and to become the first ski discounter online. If Radical Downhill can acquire sufficient inventory, it could launch a new website to sell discount equipment, clothing and accessories. This low-price focus fits well with consumers’ expectations of web-based shopping. Radical Downhill must guard against its own brand erosion if it pursues this opportunity. The discount site will be different from the store’s main site and no references to Radical Downhill will be made on the discount ski page. If the e-tail site proves successful, Radical Downhill will have an opportunity to offer arts and crafts from new artists on its site. Vendors will also be approached to explore the possibility of forming a strategic e-marketing alliance where the vendor provides advertising and sales promotion support for its products being sold on the site. The biggest threat facing Radical Downhill is the trend of global warming and shifting snowfall patterns globally. The number of snow days and the amount of seasonal snowfall is decreasing across North America. Snow drives the industry. Consumers don’t think of skiing until they see snow in their back yard.
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The financial environment also has an impact on industry sales. The shrinking purchasing power of the middle class and the increased costs of lift tickets and equipment have combined to decrease the total number of skiers. Less than five percent of the U.S. population participates in skiing or snowboarding. Its image as an elitist sport remains intact. Consumer/Social There are three main geographic regions of the country in which skiers reside. They are the northeast (Pennsylvania and north), the mid-west (Ohio, Michigan, Indiana, Illinois, Wisconsin, and Minnesota), and the northwest (Utah, Colorado, Idaho, Oregon, Washington, and Northern California). Most skiers are suburbanites and have the demographic characteristics presented above. Trends impacting the industry are the reduced numbers of skiers and the reduced number of days skied by each. Innovations in ski design have made skiing easier for recreational skiers (parabolic skis), but have failed to re-invigorate the sport. Snowboarding is the fastest growing segment of the snowsport industry and appeals to a younger, more adventurous clientele than does alpine skiing. The reduced number of skiers and of days skied is attributable to the raising cost of skiing, including rapidly raising lift ticket prices. Competitive At the macro-level, there are more ski shops going out of business each year than there are new entrants into the marketplace. The number one reason for ski shop bankruptcies is the inability to pay suppliers for goods shipped on credit. At the micro-level, Radical Downhill has four competitors within a ten-mile radius of their store location. One of the competitors is experiencing financial difficulties. The others are surviving. Although there are many ski shops in North America, few are looking to the Internet with an eye for increasing sales. Most are too busy trying to survive season to season. Time, costs, and expertise seem to be the prevalent barriers to entry. And with manufacturers publishing their Manufacturer’s Suggested Retail Price (MSRP) plus threatening retaliation for deviation from the MSRP, there is little to no price competition in the ski industry. Over time, as the competition becomes more technologically astute and as web page development and maintenance becomes easier, more competitors will enter the online retail market. However, Radical Downhill will have an established web presence by then along with a dedicated customer base. Technological Ski and snowboard design and manufacturing technology is undergoing dramatic changes. Newly engineered and designed skis are making it easier for recreational skiers to ski proficiently. On the online retailing side, as website development and maintenance software becomes more user friendly, more competitors are expected to enter the online ski retail market. The technology needed to launch the website is minimal. The computers, a computer network complete with a

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dedicated server and a DSL high-speed Internet connection are the main components. Our computers will be obsolete within the next three years and will need to be replaced. This is not something that is unique to us. It may make more sense for us to lease our computers and have an upgrade agreement. Using this strategy, we are never more than one or two innovations away from the state of the art in computer systems. While no one on our staff has experience developing, posting, and maintaining websites, Radical Downhill plans to either train ourselves to do this or hire a consultant to provide these services for us. If we hire a consultant, he or she will need to train others to maintain the system after development and deployment. Economic Current economic conditions exacerbate declining industry revenues by reducing the number of middle-income skiers and snowboarders. The affluent aren’t as impacted by the economic downturn, although they are becoming increasingly selective about where they spend their vacation time and money. All signs point to an early economic recovery, but uncertainty regarding the rapidity at which the economy will change abounds. Legal/Regulatory There are no foreseeable changes in the legal and regulatory environment and its impact on the snowsport industry. Legal and regulatory influences, however, are deemed to be the culprits in driving lift ticket prices out of reach for the average person. Ski areas are forced to charge higher rates every year to cover increasing insurance costs. Litigation against ski areas and ski shops is one of the major causes of bankruptcy in the industry. The burden of skier safety has shifted from the skier to the resort and to the shop responsible for outfitting the skier. Industry Analysis/Trends The ski/snowsport industry is in the maturity stage of market development and is possibly heading into decline. According to the National Sporting Goods Association, there were 7.4 million skiers and 3.3 million snowboarders in the U.S. in 1999. These numbers are down from the previous year, a trend that has been consistent for the past three years. In terms of dollar volume, the alpine ski industry had $793 million in sales in 1999 and the snowboard industry had $184 million in sales for the same period. No single ski shop has more than one percent of the total market share. With gross sales of $900,000 per year, Radical Downhill is a minor player in the ski industry. However, with ski shop bankruptcies at an all time high, Radical Downhill is a profitable exception in its industry. To gather more information about the ski industry as a whole and the characteristics of ski and snowboard customers, the National Sporting Goods Association’s website at http://www.nsga.org was searched. While much of the information is available for free, access to the in-depth reports requires a membership. Macro-level information such as the total number of skiers and snowboarders in the U.S. age seven and older (10.7 million) and the total industry sales for skis and snowboards ($976.5 million) is available for free.

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Core Competency Comparison Radical Core Strength Secondary Strength Next Strength Biggest Weakness Second Weakness Next Weakness Expertise High Quality Service Seasonality Cash Flow Declining Customer Base Crossed Sabers High Quality Value Close to where skiers live Far from Skiing Too far for emergency repairs Operated by nonskiers Ski and Sports Lower Prices Location Service Seasonality Cash Flow Problems Bad Credit Ski Outlet Lower Prices Value Close to where skiers live Far from Skiing To far for emergency repairs Declining Customer Base Ski Lodge Lowest Price Large variety Large Warehouse No control over inventory No service No warranties

Competitor Analysis There are four competitors within ten miles of Radical Downhill, one of which is the area shop (the ski shop in the ski lodge at the base of the mountain). The total number of skiers coming to the ski area each year is declining and the amount of time that they stay at the area is declining as well. The exception to this trend is the radical ski and snowboard segments, both of which are experiencing growth. Of the four competitors, three are financially stable and one is in trouble with its suppliers. The total size of the local market for ski and snowboard equipment, clothing, and accessories is estimated to be about $3 to $5 million per year. Radical Downhill is the second largest shop in terms of gross sales. It is positioned to gain local market share should one of its competitors goes out of business. In addition, it may be able to gain some inventory for a bargain if its competitor goes out of business. Local growth for Radical Downhill therefore depends on the demise of its competition rather than an expansion of demand. However, Radical Downhill plans to expand its market by becoming the worldwide distributor of custom-made skis and snowboards and automobile racks. To provide management with a concise comparison of its retail competition, the following table was developed.

Company Analysis The husband and wife team that cofounded Radical Downhill in 1991 has 40+ years of experience between them in the ski industry, mostly however as ski instructors. Both are highly
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educated professionals and have played key roles in the management of Radical Downhill. They are being advised by an advisory board consisting of upper level managers (former colleagues) who remained in industry. Currently Radical Downhill competes in the mountain sports industry on a local basis. It is the number one performing specialty shop in its market and seeks expand its reach to a national and international audience. The company uses existing distribution channels to supply its store and has an opportunity to partner with the local custom production market to develop “mass-customized” products for the extreme mountain sports market. Customer Analysis Consumers of ski and snowboard equipment, clothing, and accessories tend to be upscale and outdoor oriented. They purchase equipment infrequently and therefore seek durability in addition to performance. Many of these consumers are brand loyal, with parents, friends, and role models being the main influences on brand preference. On average, consumers spend seven days or less skiing per season. Many schedule their family ski holiday to coincide with the week between Christmas and New Years. Skis and snowboard equipment, clothing, and accessories are specialty goods and the suppliers use either selective or exclusive distribution. This means that shops in close proximity may not offer the same products or mix of products depending on the supplier’s distribution strategy. Radical Downhill’s customers tend to be at the upper end of either the financial continuum or of the dedication-to-skiing continuum. That is, they are either financially well off or highly dedicated skiers. They are able and willing to pay for the best in quality and service. Radical’s customers are unique because of their commitment to leading edge technologies. Every season, they have to have the best products available. They stay informed by reading ski and snowboardoriented consumer magazines and by talking to “experts” such as ski instructors. In addition, they are thrill-seekers who enjoy pushing their limits and capabilities on the mountain. The extreme ski and snowboard crowd has a unique sense of joie-de-vive. Their motto is “live for the moment.” Demographics In terms of demographics, skiers and snowboarders tend to be between the ages of 25 to 34 (35.6 percent), male (70.8 percent), have household income in excess of $50,000 per year (51.6 percent), and are college graduates (43.4 percent). These characteristics (professional male college graduates) mirror the characteristics of typical Internet users. Extreme skiers and snowboarders tend to be between the ages of 16 and 28. Most are male (75 percent) and live in households with income in excess of $50,000 per year. Geo-demographics There are three main geographic regions of the country in which skiers reside. They are the northeast (Pennsylvania and north), the mid-west (Ohio, Michigan, Indiana, Illinois, Wisconsin, and Minnesota), and the northwest (Utah, Colorado, Idaho, Oregon, Washington, and Northern

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California). Most skiers are suburbanites and have the demographic characteristics presented above. Psychographics Skiers and snowboarders tend to share a love of outdoor activities and seek the adrenaline rush of conquering the mountain. Extreme skiers and snowboarders enjoy pushing the envelope more than do recreational skiers. They live hard, play hard, and party hard. They are hedonistic and live for the moment. Extreme skiers and snowboarders also tend to enjoy in-line skating, hiking, climbing, mountain biking, music, partying, and socializing with friends. Usage and Usage Rate There are different usage rates and segments based on how many days one skis per year. Heavy users, those people who spend more than thirty days per season on the slopes, tend to make skiing the focus of their lives. They either work in the ski industry or live close enough to a ski area so that they can indulge in their passion. Skiers that ski between 10 and 29 days per year are moderate users. They enjoy skiing, but their lives do not revolve around having the opportunity to do so. They tend to focus more on the social aspect of skiing than on the experience itself. The majority of skiers in the U.S. ski less than 10 days per year. These light users are referred to as recreational skiers. They enjoy skiing, but don’t ski enough to become highly proficient. For this group, the ski trip tends to be a vacation.

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SWOT Analysis Summary
Strengths Location Family-owned Profitable Educated owners (MBA & JD) Dedicated employees – low turnover High quality/upper end products Excellent service Custom-made skis & snowboards New technology rack system Arts & Crafts from local artisans Opportunities Can be one of the first shops with online sales Potential to launch a separate clearance or discount site Can represent/obtain new vendors Can represent/partner with new artists Market expansion Potential to become the nationally or globally preferred shop for extreme skiers SWOT Analysis Chart Weaknesses Seasonal business Cash flow fluctuations Mature industry – possibly in decline No website building skills Difficult to offer services via the Internet

Threats Four local competitors Six online competitors Hundreds of shops in North America Global warming Shrinking consumer purchasing power Technological innovation – computer systems need to be updated on a regular basis

Market – Product Focus
This section describes the marketing and product objectives for Radical Downhill and its target markets, points of difference, and the positioning of its product offerings. Marketing and Product Objectives Radical Downhill seeks to expand its markets by offering custom-made skis and snowboards, automobile racks and customer artwork. The prospect for growth in the local market is minimal, unless Radical purchases one of the competitors or one of the competitors goes out of business. With more products being sold via the Internet and the prospects for a continued increase in the amount of online shopping, Radical Downhill is making a bet on market expansion. While it will predominantly remain dependent on sales within the local community, Radical Downhill hopes to expand its customer base by serving the extreme ski and snowboard niche nationally and internationally.

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The online market for ski and snowboard equipment is growing and the number of competitors is low. Radical Downhill will be one of the first shops to go online and sell equipment. The challenge is to appeal to the upper income segment online. Most online shoppers tend to be price shoppers or bargain seekers. Radical Downhill is betting there is a market for premium custommade products on line and believes it is a prospect worth pursuing. Target Markets Radical Downhill serves the upper income segment of the market. Its customers either have enough money to afford the very best, or spend a high proportion of their income on their equipment, clothing and accessories. In addition, it has “ownership” of the local and regional extreme ski and snowboard niche. Visitors to the ski area come to the shop to purchase a Radical Downhill t-shirt or sweatshirt whether they are extreme skiers or not because of the store’s reputation. Segmenting in the ski industry is accomplished demographically with the main variables being income and social class. The upper income segment is the smallest in terms of total consumers but offers higher average margins than the other segments. The upper income segment consists mainly of singles or working professionals with few or no children. Given the cost of skiing and of equipment, clothing and accessories, there is a growing price conscious segment. This segment is less concerned with the performance of its equipment and more concerned with the price of outfitting an entire family. The price conscious segment consists of middle income families who enjoy skiing and outdoor sports. They strive to emulate the consumers in the upper income segment. Most ski shops are location-bound. Area ski shops exist to service visitors to the ski slope and are conveniently located in close proximity to the ski area. Urban and suburban ski shops are destination stores. Both are specialty shops, but area shops have more immediate competition than do urban and suburban shops. Regardless of where skiers purchase their equipment, they need ski repair or tuning services while they are at the slope. As a result, they take the equipment to the closest available shop. More importantly, they take the equipment to the shop that can accommodate their service needs while they wait. So in addition to segmenting by the quality of the equipment, clothing, and accessories offered, ski shops are segmented by their perceived service quality and the time that it takes to deliver those services. Points of Difference Radical Downhill prides itself in offering top-of-the-line products from the market leaders in the ski and snowboard industry. Skis and hard-goods generate a 40 percent margin, clothing generates a 50 percent margin, and accessories can generate up to a 400 percent margin. In addition to selling equipment, clothing, and accessories, Radical Downhill generates additional revenue through its ski and snowboard rentals and its technical services. Technical services include ski and snowboard binding mounting services and tuning and repair services. Likewise, it services the mountain bikes that it sells including having annual tune-up packages and performing on-site repairs while the customer waits. Most of its service business during the

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prime season is “service on demand” meaning that it is performed while the customer waits. Since they provide this high level of service, Radical Downhill can charge premium prices for its services. Skiers are willing to pay for immediate service rather than risk losing a day on the snow because of equipment problems. Radical Downhill focuses on the upper end of the market, although it does stock mid- and lowerpriced equipment and clothing for its price conscious customers. This reputation for quality products and quality services, combined with the allure of having a shop run by professional skiers and snowboarders for professional skiers and snowboarders, has positioned Radical Downhill uniquely in the local market. Its competitors focus more on mid- and lower-priced equipment and clothing, targeting primarily the price conscious segment. Of the four ski shops located within ten miles of Radical Downhill, only one offers a level of service similar to that of Radical Downhill’s: the area ski shop. None of the local competitors offer their products for sale via the Internet. And certainly none offer custom-made extreme skis and snowboards. A search of the Internet yielded six ski shops in North America (Canada, Mexico & the U.S.) that sell equipment, clothing and accessories online. Two of the competitors are in Western Canada. One of the competitors has products pictured online, but can only process telephone orders and not online orders. Radical Downhill defined its online ski retail competition as the four U.S.based competitors.
Product/Servic e Comparison Price Perceived Quality Internet marketing/sale s Feature 1 Feature 2 Feature 3 Feature 4 Radical High High In developmen t Custommade Top of line quality Ski Professional s Good Service Alpine High High Yes, but not much depth Retail Top of line quality Business Professional s Acceptable Service Ski House Moderate to low Moderate to low Yes Retail Acceptable quality Ski Professional s Good Service Mountain Top Moderate to low Moderate to low Yes, but not much depth Retail Acceptable quality Business Professional s Acceptable Service Boards Inc. Discount Moderate to low Yes, but only close-outs Retail Quality dependent on supply Discount Professional s No Service

Competitive Comparison Matrix

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Positioning Brand image is something that is built over time. Radical Downhill has spent considerable time and effort over the past decade building an image of high quality and expert knowledge. Our competitive advantages include our level of service and dedicated knowledgeable employees. Neither transfers well to the Internet. While our current customers have the benefit of visiting the ski shop, seeing the quality, and experiencing our service, cyber-customers can only infer these qualities from the information presented to them online. Creating a Brand Image Online By having a professionally designed website that is both appealing and functional, and by providing the best in after-sale service including warranties, Radical believes that it can build the same brand image in the minds of our cyber-customers as exists in our current customers. And by including exterior and interior photographs of the store on the website, we can create a sense of familiarity in the minds of our cyber-customers. The key to this is to create a buzz about the custom-made skis and snowboards among extreme sports enthusiasts. Maintaining Brand Image/Branding Concerns Since we plan to offer custom-made skis and snowboards, car racks, and locally made arts & crafts via the Internet, we can sell online year-round. Seasonal themes and promotions will allow us to keep the site’s content fresh. Using a continuous online promotion strategy, supported by seasonal advertising in the traditional media, we plan to keep our name in front of consumers and to generate the projected traffic goal of 1,000 unique customer visits per week.

Marketing Program
Our reason for selling skis online is to broaden the consumer base. Ski shops are location bound. There are few strategies available to expand sales in a competitive local environment. Radical’s goal is to use a market diversification strategy – where we offer our products and services to new markets – in order to increase our overall sales. We seek to become one of the top, if not the top, ski retailers doing business online. No data is available on the division of market share among the six competitors. After reviewing the online competition, only one competitor has a site that we find appealing, and their product depth is almost nonexistent (only a few products are offered and not in many sizes). No current online competitor has the capability of offering custom-made skis and snowboards. We are selling premium, custom-made products that do not have published MSRPs. Given the lack of information regarding the volume of skis and snowboards sold online, it is difficult to estimate an expected level of sales. The company plans to sell 280 pairs of custom-made skis and/or snowboards in a season (November to April). This is our target number in order to consider the online marketing effort a success.

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Product and Product Strategy Radical Downhill will offer two versions of the custom-made snow ski, two versions of the custom-made snowboard, a technologically innovative car rack system, and local arts & crafts to the Extreme ski and snowboard niche via the Internet. All skis, snowboards, and car racks will be marketed under the Radical Downhill name in order to build brand equity and awareness. The table below provides an overview of the product offerings and their descriptions.
Product Model Characteristics Slalom ski with Giant Slalom stability at high speeds. Quick turns and great cruising. Wider profile than a normal ski, great floater in deep powder. Giant Slalom profile for cruising. Extreme out-ofbounds snowboard that is stable at high speeds. Accepts both hard-boot and soft-boot mounting systems. Aggressive freestyle board for use in the pipeline. Extra dense base and edges for grinding and rail riding. Accepts both hardboot and soft-boot mounting systems. Sizes

Extreme Ski

Outer Limits

193, 198, 203, 208, 213 cm.

Powder Ski

Avalanche

193, 198, 203, 208, 213 cm.

Extreme Snowboard

Back Bowl Busta’

158, 163, 168, 173, 178 cm.

Pipeline Snowboard

Der Terminator

143, 148, 153, 158, 163 cm.

Rack System

Mounting kit

Four feet, pads and mounting hardware

Varies by automobile type

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Rack System

Rack bars

Innovative bar system. Non-rust, highly durable composite material. Strong and light.

50, 53, 56, 59, 62, 65 inches

Rack System

Carrying kits

Sold in groups of two

Skis, snowboards, bicycle

Rack System

Aqua kits

Sold individually

Kayak, canoe, sailboard

Rack System

Covered cargo carriers

Sold individually

½ width and full width

Arts & Crafts

Jewelry

Specializing in silver and turquoise and native jewelry

Bracelets, necklaces, earrings, pendants, piercing studs, etc.

Arts & Crafts

Lithographs

Numbered prints by area artists

Nature and action motifs

Arts & Crafts

Paintings

Oil and Water color paintings. All originals.

Nature and action motifs

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Arts & Crafts

Stained Glass

Leaded glass – Tiffany-style quality

Stained glass, lamps and lamp shades, etc.

Arts & Crafts

Ceramics

Glazed and unglazed ceramics by local and native craftspeople

Figurines, bowls, kitchenware, art, etc.

Arts & Crafts

Baskets

Native American weaved baskets

Native crafts that are functional and artistic.

Product offerings and their descriptions

Augmented Product Definition Each of the products offered online, excluding artwork, clothing and clothing accessories, will come with an extended warranty. In addition, Radical Downhill will provide access to its service department via the Internet so that customers with equipment questions can interact with a customer service representative. Price For the custom-made skis and snowboards, there is no defined Manufacturer’s Suggested Retail Price (MSRP). Because of this, and the uniqueness of the product, we will use a price skimming strategy. For the car racks, an MSRP exists, but we are allowed to market them under our own brand name (contract manufacturing). And for the arts & crafts, the artist sets the price and we receive a commission on all sales (25 percent). Static Pricing Strategies For our regular equipment, clothing, and accessories, the suppliers limit us with regard to how we price their products. If we deviate too far from their MSRP, there is a possibility of losing the supplier. And since the MSRP’s are widely published, consumers have little incentive to be price shoppers for the current season’s equipment, clothing and accessories. There is more pricing latitude with older equipment. Items left over from last season can be sold at a discount to clear them from inventory. Since the manufacturer changes colors and styles every season, it is impossible to sell last season’s products for this season’s prices. If we have leftover inventory, we may use nontraditional pricing strategies such as auctions or reverse auctions to build market share or e-mail lists. Otherwise, we are limited to static pricing
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strategies for the current season’s product offerings. This pricing option only comes into play if a decision is made to launch a separate discount equipment, clothing and accessories site. In the table below are the retail prices, wholesale prices, and margins for each of the products that we intend to sell online.
Product Outer Limits Avalanche Back Bowl Busta’ Der Terminator Accessories – tshirts, sweatshirts Rack Mounting kit Rack bars Carrying kit – ski Carrying kit – snowboard Carrying kit – bike Carrying kit – kayak, canoe, sailboard Covered cargo carrier – ½ size Covered cargo carrier – full size Arts & Crafts Wholesale prices and margins Retail Price $1,500 $1,500 $1,200 $1,200 $40 – 60 $80 $70 – 95 by increments of $5 depending on size $20 for 2 $20 each $45 each $50 each $200 $400 Varies – set by artist Cost $450 $450 $360 $360 $10 – 15 $40 $35 – 47.50 $10 $10 $22.50 $25 $100 $200 Not applicable Margin 70 percent 70 percent 70 percent 70 percent 75 percent 50 percent 50 percent 50 percent 50 percent 50 percent 50 percent 50 percent 50 percent 25 percent

Dynamic Pricing Strategies Beginning in 15 May every year, Radical Downhill will sell its leftover inventory via online auction sites such as e-Bay. Customers purchasing items via online auction will receive only the

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basic augmented product service levels. Radical Downhill will offer auction customers the option of purchasing an extended warranty and will target online auction customers for direct mail campaigns in an effort to convert them to committed customers. Promotion Our budget for e-sales promotion is $50,000. Since we are marketing direct to consumers, we will use a combination of special offers, promotional discounts, limited-time offers, and sale prices to move consumers from desire to action. We intend to rely heavily on Internet sales promotion but will also use traditional media. Mass Media Sales Promotion Strategy Most of the sales promotion money is to be spent on traditional media strategies such as direct mail and specialty advertising. Our intention is to rent a list of active snowboarders and skiers from one of the ski and/or snowboard publications and to send a direct mail piece to each list member. The rental cost of the list depends on its size as these are priced on a cost per thousand (CPM) basis. A list of 100,000 snowboarders and skiers between the ages of 16 and 28 may cost as much as $2,000. Sorted bulk rate postage varies depending on the size and weight of the direct mail piece. A tri-fold self mailer may cost as little as 13.9 cents each to mail. The cost to mail to a list of 100,000 equals $13,900. If we send a small (four page) catalog-style or newsletter-style mailer, we can keep printing costs to a minimum (2 ½ cents per page or 10 cents per piece). If we pursue this strategy, we can only afford one mailing. A better strategy may be to design Radical Downhill post cards that invite addressees to visit our web site. The post cards could feature seasonal themes custom designed by our local artists. Mailing cost for sorted bulk rate postcards is 7.9 cents per postcard. The cost for postage is therefore $7,900. The cost for producing these cards is less than five cents each (3.3 cents each for orders of 450,000 or more). If we order 450,000 postcards, the total investment is $14,850. The cost of four mailings is $31,600. The total cost of this direct mail sales promotion campaign is $46,450. Online Sales Promotion Strategy Although it will take time to build a good e-mail list, our intention is to focus sales promotion efforts on people who visit the site, purchase from our store, purchase from our site, or contact us for more information. After we begin to collect e-mail addresses, we intend to launch an e-mail sales promotion campaign. Visitors to the site will be offered e-mail coupons, discounts, limitedtime offers, and special offers. We also intend to offer our site visitors an opt-in e-newsletter. The content of this e-newsletter will focus on extreme skiing and snowboard events, competitions, and profiles of competitors. In addition, each e-newsletter will contain hot links to special offers for that month. Assuming that we don’t need to pay for an existing e-mail list, the cost of the Internet sales promotion efforts will be less than $1,000.

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Channel Strategies: Push and Pull Most of the sales promotion money is to be spent on traditional media strategies such as direct mail and specialty advertising. Our intention is to rent a list of active snowboarders and skiers from one of the ski and/or snowboard publications and to send a direct mail piece to each list member. The rental cost of the list depends on its size as these are priced on a cost per thousand (CPM) basis. Online Promotion/Advertising Objectives Our goal is to generate traffic to our site by advertising the Radical Downhill site address through traditional media and through e-marketing efforts. In addition, we will use a direct mail campaign to inform current and former customers of our sites existence and address. The web site will be an extension of our customer service orientation. By providing our current customers with a way to “visit” us from wherever they are in the world, we seek to keep connected with them. And by drawing new visitors to our site and encouraging them to become customers, we seek to expand our customer base beyond our typical location-bound clientele.
Online Marketing Goals Find Affiliates Gather Customer Information Improve Customer Service Increase Brand/Name Awareness Sell Goods or Services Enhance Company Image Engage in Suggestive Selling Generate Sales Leads Online Marketing Checklist Mailing Lists No No No Possibly Possibly Possibly Possibly Possibly Database Marketin g No Yes Yes Yes Yes Yes Yes No Direct Email No Yes Yes Yes Yes Yes Yes Yes Online Sales No Yes Yes Yes Yes Yes Yes Yes Viral Marketin g Yes Yes No Yes Yes Yes Yes Yes

To support the launch of our site we intend to pursue all public relations and publicity options available. To establish brand equity, the press release will feature the Radical Downhill name, then the custom-made skis and snowboards, rack systems, and local arts & crafts. Mass Media Public Relations Strategies In addition to Internet public relations, we will use traditional public relations media to support our e-marketing plan. We will hold a press conference to announce our E-marketing business and the availability of custom-made skis and snowboards on the Internet. Press releases will also be sent to the Associated Press, various consumer magazines, industry magazines, television stations, and radio stations. As with our Internet public relations strategy, we plan to consistently

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place our message in front of reporters who can best publicize our e-tail site and retail store. We expect to send a minimum of one press release per month to the media. Mass Offline Communications Strategy We intend to spend $75,000 on magazine print ads in specialty media such as Outside Magazine, a magazine that has a broad appeal in both the extreme ski and snowboard community. Since our products are priced at the top of the price range, we must also seek other methods of reaching our target market such as specialty advertising. Table tents for ski area bars and lounges, drink coasters and radical ski and snowboard posters are some possible specialty advertising items that we may produce. With only $75,000 to spend, it is essential to get the most exposure for our money. Radical Downhill enjoys the benefits of positive word-of-mouth advertising. A majority of the visitors to Big Basin stop by the ski shop during their vacation to purchase a Radical Downhill tshirt or sweatshirt. These items, by virtue of their unique artwork including Radical’s signature snowboard with Mohawk hair and body piercing, are proof to others that you are in the “incrowd.” Radical Downhill will continue to change the graphics offered on their clothing on an annual basis. This serves to stimulate demand and creates a collectors market (based on release dates) for the t-shirts and sweatshirts. Personal Offline Communications Strategy We intend to use a direct mail campaign to inform potential customers about our site and to invite them to visit. Our intention is to get four exposures per year from this campaign. Those four mailings would need to hit the post office in October, November, December and January for distribution in November, December, January and February. These are the four peak months for ski and snowboard purchases as well as for car rack purchases. Mass Online Communications Strategy Our Internet advertising strategy is straightforward. We will register our website with as many search engines as we can by using one of the commercial submission programs. These programs list your site address with as many as 400 search engines, business directories, and online yellow pages. We will resubmit every three months, coinciding with the beginning of each quarter, to keep our site name at the top of the search engine’s site rankings. In addition, we will create a banner ad and pay for its placement on numerous sites that appeal to extreme skiers and snowboarders. The budget for Internet advertising is $12,000 with the bulk of the banner ad placements occurring in the second and third quarters. There are currently 35 to 40 online snowboard magazines to select from and on skinet.com, the premier online ski magazine from the publishers of Ski magazine. Affiliate Programs All ski and snowboard instructors who are registered with the PSIA and who wish to participate in our affiliate program will be provided with a unique affiliate identification number and will have access to the affiliate section of our website. Their incentive to participate is simple: if they sell any combination of ten pairs of skis or snowboards, they will receive either a free set of skis or a free snowboard. The affiliates can offer their friends, colleagues, students, etc. our custom-made skis and snowboards for 10

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percent off the retail price. The instructors can either print out our order form from the affiliate section of the website and have their customers order via mail or fax, or they can have customers log in to a special referred customer section of our site by using the instructor’s unique affiliate identification number. Radical’s affiliate program for non-PSIA customers includes offering affiliates the following: • • • Points rewarded for each 1000 referrals Points rewarded for each referral who purchases Ability to use reward points to purchase from the site Affiliates will receive five points for each 1000 referrals that click through from their site to Radical Downhill’s site. Points rewarded for referrals who purchase equals one percent of the purchaser’s gross sale. Reward points are cumulative from season to season. Affiliates can save their reward points for two to three seasons or more before cashing them in. Personal Online Communications Strategy During the initial year of our e-marketing plan, the bulk of our funds are dedicated to advertising and sales promotion efforts. In subsequent years, most of the emphasis will be placed on Internet direct marketing techniques. The success of an Internet direct marketing campaign depends upon the quality of the proprietary and/or rented e-mail list. The biggest tasks during the first year will be to collect e-mail addresses from store customers, e-tail customers, and visitors and from extreme skiers and snowboarders in general. Viral Marketing Our viral marketing program will utilize a form of marketing well known in the ski industry. It is essentially a referral program whereby ski and snowboard instructors registered with the Professional Ski Instructors Association (PSIA) become area representatives for Radical Downhill’s custom-made skis and snowboards. These instructors are the opinion leaders on the ski slopes and have considerable influence over consumer perceptions and preference. We have budgeted $10,000 to support our affiliate program. Generating E-Mail Lists for Advertising and Sales Promotion Radical Downhill has a database of its customers over the past ten years, but the information doesn’t include their e-mail addresses. It is our intention to build a proprietary database of customers and site visitors to which we can send messages. Site visitors will be asked to provide us with their e-mail address in order to receive special promotions and discounts sent by e-mail. Our list will be maintained and e-mail recipients will be provided with information on how to remove their address from the e-mail list.
Activities/Evaluatio n List Swap List Rental Viral/Affiliate Programs Effectivenes s Low Low Medium Costs High Moderat e Moderat e Potential Negative s High High Low Privac y Issues High High Low Rate of Return Low Low High

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Site registration Product registration E-Newsletters E-zines Give-aways/contests Harvesting

High High Medium Medium High Low

Low Low Medium High High High

Medium Low Low Low Low High

Medium Low Low Low Low Medium

Medium Medium Medium Low Low Low

E-Mail List Acquisition Strategy Evaluation

Online Public Relations Strategies The company plans to send public relations announcements to the web-based public relations sites for immediate distribution. The goal is to manage our press releases and public relations efforts so that there is a minimum of one press release per month. Our communications budget is the largest portion of the total e-marketing budget. We have allocated $97,000 for this task and plan to spend the majority of it in traditional media to build awareness of the e-tail site, generate interest among extreme skiers, build their desire to purchase our custom-made skis and snowboards, and prod them into action. In subsequent years, we will rely less on advertising in traditional media and more on direct marketing techniques. Radical Downhill intends to seek the designation as an “Award Winning Site” by registering with the known award providers and by submitting the site’s address on a quarterly basis. These designations have a positive impact on the attitudes of casual surfers towards one’s site. Finally, Radical Downhill will send out a monthly E-newsletter to its e-mail list in order to keep their name in front of the customer twelve months per year. During the off-season months in the northern hemisphere, the southern hemisphere is enjoying snow. Ski season in New Zealand, Chile, and Argentina, three big ski countries in the southern hemisphere, begins in May and ends in September. Community Strategic Development Radical Downhill has an established clientele and this clientele is Internet savvy. One of the goals of the website it to provide non-local customers with a means to feel connected to Radical Downhill and to other radical downhill skiers and snowboarders. The people criteria that we will use to develop online community involves using opt-in e-mail, customer loyalty programs, providing customers with the option of posting a one page customized website and vanity e-mail addresses. The culture criterion that Radical Downhill will use is the development of a Radical Downhill forum for the open exchange of ideas and experiences. Online forums are known for fostering a sense of community and connectedness. Easy navigation and fast loading graphics will be used as the technology criterion for building community. Place In addition to serving our existing clientele from our principle location, we propose using preexisting package delivery channels to reach national and international clients. We plan to partner with U.P.S. for domestic shipping and DHL for international shipping. U.P.S. stops at the shop

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daily for deliveries or pickups. Radical already has a strong relationship with U.P.S. and it is the easiest option in terms of familiarity with their service and trust in their ability to deliver as promised. The customer pays shipping with their level of desired service determining the price. Next day air is the most expensive and ground shipping is the least expensive. Channel Management Our distribution strategy, shipping by U.P.S. and DHL, will be evaluated on an annual basis to determine whether or not customer expectations are being met. It is possible that at sometime in the future Radical Downhill will select one delivery provider to handle all of its domestic and international shipments.

Data and Projections
Our goal is to increase our gross sales by 30 percent by using online marketing. We will be using the e-retailer model. That is, we are primarily a retail store offering custom-made skis and snowboards to a niche market. Our sales last season were $1,700,000. To reach our goal, we need to sell $510,000 worth of equipment, accessories, and arts & crafts online. Detailed financial projections may be found in Appendix B. Sales Forecasting Methods Used Radical Downhill is pursuing an e-tailing model and therefore will use expert judgment to predict the number of units that we will sell given the price of the custom-made skis and snowboards. Based on our ten years of experience in the alpine sports retail industry, we established sales targets for the products that we will sell online. The estimates are conservative. Our fiscal year begins July 1 and ends on June 30. Our goal is to achieve $510,000 in gross sales via the Internet for the fiscal year. One of the assumptions that we make is that the average purchase price of a car rack system is $182.50 ($80 for mounting kit, $82.50 average bar price and $20 for a ski or snowboard carrying kit). Because of the innovative technology and price, demand for the rack system is expected to increase rapidly once we establish the brand in the market. However, for the first year, we use a conservative estimate for the rack systems. Another assumption is that any arts & crafts sold are considered “bonus sales” since we do not own the inventory. Because we are selling the arts & crafts on a consignment basis, and to remain conservative in our estimate, there are no sales forecast estimates for the arts & crafts.
Our sales forecast for each of the products is: Product Skis Snowboards Accessories Car racks Quarter 1 10 10 $10,000 30 Quarter 2 50 50 $25,000 75 Quarter 3 70 50 $35,000 85 Quarter 4 25 15 $15,000 43 Total 155 125 $85,000 233

First year sales forecast by product line (all in units except accessories)

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Sales Data For the e-tailing model, the company has made conservative estimates for each product line by quarter. The goal is to increase gross sales by $510,000 in the first year (30 percent) and incrementally for the next couple of years. Given the proposed retail price of each product, the year 1 sales revenue forecast can be summarized by the following table:

S kis 155

Avg. $ $1,50 0

Snow Boards 125

Avg. $ $1,20 0

Accessories $85,000

Car Racks 233

Avg. $ $182.50

Total $510,022.50

Year 1 sales revenue forecast Below is the year one sales forecast figures by month followed by the sales forecast by quarter for three years.

Year 1 sales forecast

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Sales by quarter

E-Marketing’s Impact on Traditional Marketing Channels Our e-marketing/e-retailing plans will have little impact on our traditional marketing channels. The company will remain a regionally oriented alpine sports store designed to serve extreme skiers and snowboarders, professional skiers and snowboarders, and vacationing skiers. If anything, our online presence will enhance our image nationally and internationally. In a bestcase scenario, the publicity generated by our online e-tailing efforts and our custom-made skis and snowboards will establish us as a destination retail store among the extreme skiing and snowboarding market niche. Costs To support the e-tailing rollout and the marketing of custom-made skis and snowboards, Radical Downhill estimates that it will cost $200,000 to accomplish its objectives. Because of the seasonality of the ski business and the subsequent fluctuations in cash flow, Radical Downhill seeks either a bank loan or private investment to raise the $200,000. The primary budget assumption is that $200,000 is adequate capital for establishing an e-tail website, advertising and promoting it and generating the targeted 20 percent increase in sales in the first year. We have identified a web hosting service that will host our site for $24.95 per month. The cost to register our domain name www.RadicalDownhill.com is $70 for two years and $35 per year for each subsequent year. The cost for processing MasterCard and Visa transactions is 1.8 percent of gross sales and for American Express transactions, it is 3 percent of gross sales. Radical Downhill’s current bank will handle the processing of the credit card orders. The $200,000 marketing budget is tentatively allocated as follows:
Activity Allocation

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E-Commerce/Internet Marketing E-Advertising E-Sales Promotion E-Direct Marketing Viral & Affiliate Programs Global Aspects of E-Marketing Total Year 1 marketing budget

$30,000 $80,000 $50,000 $25,000 $10,000 $5,000 $200,000

Financial Projections Our financial results will be measured in terms of gross sales. Our goal is to increase gross sales in the first year by $510,000 and incrementally in future years, with a target of 30 percent growth per year in year two and beyond. This translates to an increase in sales in year two from $510,000 to $663,000 via e-retailing. Estimated gross profits, based upon the sale projections, exceed $352,000 in the first year. Our desired investment payback period is five years. The chart below summarizes the e-marketing expense budgets by quarter for the next three years.

E-Marketing Expenses by Quarter

Organization
Radical Downhill’s organizational structure appears below. It shows the key personnel who report to the owners. Below this level are both the full-time and part-time employees of the Company.

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At present, Radical Downhill operates with full-time employees in only essential positions. Seasonal help is added as needed and Radical Downhill enjoys the benefit of possessing a cadre of trained, qualified seasonal sales help that returns each year.
President & CEO (Owners)

Accounting & Accounts Payable

Manager of Technical Services

Manager of Retail Services

Inventory Mgmt./Shipping and Receiving

Hardgoods Buyer

Softgoods/ Accessories Buyer

Implementation Plan
The successful implementation of the marketing plan depends upon the development of a successful online marketing strategy. The components of that strategy include items such as website content, traffic management, and tracking web activity. Additional factors needed for success include securing through outsourcing a capable Internet marketing development firm and striving to launch the website in a logical and effective manner. Website Content The website must appeal to the extreme skier and snowboarder market. It must be visually stimulating, energetic, and hip. In addition, it must also appeal to a wider audience in order to assure the level of sales desired. These are the overall specifications for the site. Furthermore, the site will not be too graphic intensive and will load quickly on a wide variety of browsers and it will contain general information about extreme skiing and snowboarding in addition to information specific to Radical Downhill’s purpose. Finally, the site will be designed for the purpose of gathering information on visitors and customers in order to establish a database. In future years our online sales will rely more on database marketing efforts, e-mail marketing efforts, and affiliate programs. Traffic Management Traffic generation and management is a consistent sub-theme throughout the e-marketing plan. We intend to register our web site address with all of the search engines and can manage this task in-house by purchasing site submission software. We will use traditional advertising and Internet advertising to inform potential customers of our site’s address. We will use a direct mail campaign to increase awareness of the site and to drive more traffic to our site. We intend to
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build a proprietary e-mail list and customer database by expanding our current customer database to include critical data such as e-mail addresses. After gathering e-mail addresses by either sales, site visits, or by list rental, we will launch an e-mail advertising and promotion campaign designed to entice the recipients to visit the site. We will also write and distribute a one-page enewsletter that our customers can sign up to receive (opt-in). This monthly newsletter will be informative and provide an additional contact with our customers. Customers who receive the email newsletter will also receive information on special promotions and sales. The content on our site will change biweekly during the season to reflect the seasonality of the industry. While the overall look and navigation of the site will remain the same, the information presented will be timely, accurate, and entertaining. If we do our job correctly, not only will sales increase as expected, but the number of customers coming to the store every season will also increase, as we become a destination store. Tracking Web Activity We have the ability to track hits, unique ISP’s, pages viewed, time on site, and sales volume for our site. Our ISP provides many of these statistics. We may partner with a site diagnostic service to obtain more in-depth information about our visitors such as their viewing history/characteristics and what other pages they visit prior to and after visiting our site. The data collected in the first year of operation will become the basis for future comparisons. After one year of operation, we will make a decision as to whether to continue with the e-tail site or to convert it to a general information site. Our main concern is whether or not the site is meeting our sales objectives. A secondary concern is how to improve the site and increase sales in subsequent years. People Required Radical Downhill does not currently possess the personnel required to launch this effort internally. We intend to “job-out” website development, hosting and maintenance to a firm that specializes in e-tail website development and management. After the initial launch of the website, Radical Downhill will take over the maintenance and management of the website once it is deemed profitable to do so – that is when the cost of paying the outside consulting firm exceeds the cost of hiring a web/information systems specialist. At that time, we will add another full-time position to the staff for a Manager of Information Systems. This support position will interact with the other members of the management team to build a cohesive interactive information system including inventory management, POS, accounting, etc. Timing Introducing the online retail side of the business is a complex task and requires coordination of production and promotion. The anticipated launch of the website is during the last quarter of business (May or June). The logic for this decision is as follows: a fourth quarter roll-out will allow us to track the success or failure of our online marketing efforts for an entire year, and business volume in April tapers off to a trickle until the summer mountain bike, climbing and hiking season kicks in.

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Evaluation and Control
Quarterly sales projections and website traffic projections have been developed. Actual sales and website traffic will be compared with these targets and the marketing program will be modified to reflect changes in the external environment. Our sales goal is to increase gross sales by a minimum of $510,000 in the first year, the bulk of which should come from online sales. Another objective is to generate about 4,000 hits per month (1,000 hits per week) and to grow that to about 6,000 hits per month (1,400 per week) by the end of year 1. Below is a projection of hits and page views for year 1.

Hits and page views – projections for year 1

The tasks necessary to accomplish these objectives will be funded by the e-marketing budget detailed in a previous section. The bulk of the promotional effort is dedicated to advertising, with an emphasis on using traditional advertising to move the target market through the phases of awareness, interest, desire, and action. The e-marketing budget is high for the first year in order to allow us to establish a strong web-presence. It will be substantially lower in subsequent years as we rely more on e-mail marketing, cybercasting, and affiliate programs to build sales. Marketing Information Systems Needed Because of the shop’s existing network and DSL connection, hardware and software costs are minimal. The major cost associated with this project will be the development of a website that is appealing to the market niche and capable of processing orders. The e-retailing environment needs to be secure in order for shoppers to feel comfortable about entering their credit card numbers online. We already use IBM-compatible PC’s as our Point of Sale machines and gather information on each customer such as name, address, and telephone number. It isn’t too difficult

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for us to add another field to our database in order to capture each in-store customer’s e-mail address. Criterion Measures with Objectives Radical Downhill is using an e-tail Internet business model. The success of this form of ecommerce depends on the generation of sufficient numbers of qualified site visitors. Our objective is to generate 1,000 hits per week. Our hosting service provides us with statistics on a weekly basis. These statistics allow us to chart the number of hits per day/week/month, the referring website if applicable (which search engine the customer used to find us), the viewer’s country of origin, and the browser that they use. All visitors to the site will be asked to register to access the site by entering their e-mail address as their username and by selecting a password. This will allow us to track repeat visitors and to build a database about each visitor’s purchases, favorite areas of the site, length of time spent on the site, and preferences. We will encourage registered visitors to return to the site by holding product drawings and by sending targeted e-mail. Information can also be collected regarding the average number of visits prior to purchase, the average amount of purchase per customer, and the number of repeat customers.

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Appendix A: Biographies of Key Personnel
Robert Gonsalves Robert Gonsalves received his MBA degree from Stanford University in 1982. He received his undergraduate degree in 1980 from the University of California - Berkeley where he majored in marketing with a focus in international business. After his graduation from Stanford, Mr. Gonsalves joined a management consulting firm where he specialized in formulating market entry strategies for clients. Born in Salem, Massachusetts, he is fluent in English, Spanish and Portuguese. He began skiing at age 6 and became a ski instructor at age 18. His passion for skiing and outdoor sports has never waned. He continued as a part-time ski instructor (weekends when available) until opening Radical Downhill with his wife in 1991. He was offered a partnership in the management consulting firm in 1991 just after he announced his intention to leave the firm and move to Colorado. Julie (Glatre) Gonsalves Julie Gonsalves received her Juris Doctorate (J.D.) in Law degree from Suffolk University in 1984. She received her undergraduate degree in 1981 from the University of California – Berkeley where she double majored in accounting and French. After graduating from Suffolk, she passed the California State Bar Exam (Fall, 1984) and joined a San Francisco law firm specializing in corporate law and international trade. Born in Grenoble, France, she is fluent in French, English and German. She began skiing at age 4 and became a ski instructor at age 19 while in college. She met Robert while teaching for the same ski school. Her passion for outdoor sports has never waned and she also continued as a part-time ski instructor while employed at the law firm. She became a partner in the firm in 1990 after a rapid rise through the ranks because of her expertise in international contract law.

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Appendix B: Support Material
In the pages that follow are several key e-marketing forecasts and budgets. These projections support this e-marketing plan.

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