Joel Adams Ken Stuart Engineering Science 466b © J. Adams & K. Stuart 2002-2004 11: Introduction, Products/Services, and Marketing Section March 25, 2003

Joel Adams

Ken Stuart

Engineering Science 466b © J. Adams & K. Stuart 2002-2004

11: Introduction, Products/Services, and Marketing Section

March 25, 2003


Introduction, Products/Services and Marketing Section

11.2: Class Objectives

1. Introduction of Business Plan

2. Product/Services Section of Business Plan

3. Marketing Component of Business Plan

4. Operating Statement



• Introduction - Length ½ Page

• Give high level overview of the industry your venture will be participating in.

• Industry – Length 1-2 Pages

• More detailed background on history, key developments

• To NOT use Techno-babble !

• Keep it simple and readable.

11.3: Introduction/Industry



• Length – 1-2 pages

• Be sure to include the following:

– What is the purpose of the product or service?

– How does it achieve this purpose?

– What are its unique features (cost, design, simplicity, etc)?

– What is its technological life?

– What is its stage of development (idea, engineering model, prototype, production ready).

– How will you produce the product (capital, labour, subcontracted)?

– Can the product be protected by patent or copy right?

11.4:Products/Services Section



11.5: Product Migration Strategy



11.6: “The Market” Section of Business Plan

• Length: 5-6 Pages

• Most important part of the document

• Be sure to address the Six Key Points outlined in Doyle



11.7: Six Key Points to be included in the Marketing Section

• Who are your customers?

• How will you distribute your product?

• What are your market share objectives?

• What are other important factors

• What are the alternative solutions?

• Level of Sales for the next 5 (or ten) years



11.8: Who are your customers?

• Who will buy your product/service?

• What is their Demographic? Is it growing?

• Can your target demographic afford your product/service?

• What will make them want to buy your product/service?

• What will make them want to buy from you?

Remember, you ultimately have to sell something. Make sure you can clearly identify who will buy your product!



11.9: How will you Distribute Your Product?

• How will you reach your target customer

• Will you have Multiple “Channels to Market”? (Regional/National/Global)

• Advantages and Disadvantage of Direct vs. indirect?

Product X Target Customers

Distribution Chain

Direct



11.10: What are your market share objectives? • Estimated from the ground up (Dennis Ensing)

• As a percentage of overall market size.

• Be sure to identify the rational for capturing your market share and the costs of doing so.

• Identify the costs of not meeting your projected market share. (Sensitivity Analysis)

The projected North American market size for the SuperWidget industry in 2005 has been estimated to be $100M USD. 1 NewCo Inc. is committed to aggressively capturing 3.5% of this market within the next 2 years.

1. Reputable Market Research Report by Industry Consultant on SuperWidget Technology.



11.11: Other Important Factors?

• Are there government initiative supporting the need for your technology

• Example: 20% of new automobiles in California will be fueled by alternative energy by the year 2007.

• Seasonal Factors

• A major event that has created demand for your product.

• Developing Market Trends

• Example: People are ripping MP3’s. What about making a portable player?



11.12: What are Alternative Solutions/Competition?

• Identify not just direct competitors but competing technologies.

• Cost of these competing technologies compared to yours

• Their inefficiencies

• Identify and introduce the direct Competition. What will they do when your product/service is offered?

• Discuss the competition briefly but go into detail about them in the “Competition” Section of your business plan



• Show that you understand who your competitors are.• Show that you understand the industry• Use this section for positioning your company and

products/services (keep thinking why you?)

• SWOT Analysis – Strengths

– Weaknesses

– Opportunities

– Threats

11.13: Competition Section



11.14: Sales Projections for the Next 5 Years?

• Very important for the start-up as well as a mature business.

• For assignment show 5 years projections.

• A function of your Market Share.

• Should be qualitatively discussed in the Marketing Section and quantitatively verified in your Financials section.

• Operating Statement

• 1st year – monthly

• 2nd and 3rd year – quarterly

• 4–5th year – annual



11.15: Operating Statement?

Doyle, Figure 3.1



11.16: Operating Statement

• Also called and Income Statement or Profit and Loss Statement

• Use the Innovation Chain to assist you in identifying how you can provide a REALISTIC Operating Statement.




Line Items

• Bookings – Total value of orders takes by the sales department

• Revenue – Total Incoming Cash to the business as a result of selling products or services. Does not include sale of borrowed assets, government funding sales of capital stock




Line Items (cont’d)

• Cost of Sales - Sum of all expenses incurred in the manufacturing and/or purchasing and selling of goods sold during an accounting period.

• Gross Profit (Gross Margin) – Net Sales less Cost of Goods Sold.

• Operating Expenses – General and Administrative expenses excluding cost of goods sold, interest, income tax and the costs of financing a venture




Doyle, Figure 3.2




Doyle, Figure 3.3



11.21: Review

Key Terms

Sales Projection, Distribution, Channels, Sensitivity Analysis, Operating Statement

• Introduction

• Product & Services

• Marketing: Include the Six Key Points in YOUR Business Plan Document and Presentation

• Development an Operating Statement for your New Business Venture



11.22: Next Classes

• Tuesday March 30th

• Discussion on Market Research Report

• Financial Statements – Projections

• Investment Needs

• Thursday April 1st (no joke!)

• Review Tutorial and Presentation Overview

• Personal Business Opportunity Document

• WEDNESDAY April 7th @ 7:00pm

• Group Presentations (final class)

Documents

Joel Adams Ken Stuart Engineering Science 466b © J. Adams & K. Stuart 2002-2004 11: Introduction, Products/Services, and Marketing Section March 25, 2003