“Redefining Ease of Use”
NOTE: THIS IS A SAMPLE OF HOW A MARKETING PLAN COULD BE
DONE AND IS NOT IN ACCORDANCE WITH THE INSTRUCTIONS FOR
CLASSES THIS SEMESTER. DO NOTE THE CLARITY OF LAYOUT AND
GENERAL GOOD WRITING, BUT ALSO NOTE THAT IT DOES HAVE SOME
WEAKNESSES IN CONTENT
Introduction and Background
Consumer electronics is an ever-increasing market in today’s technological age. Almost every single household has some type of electronic device. Each and every
electronic device comes with instructions, whether they are a one-page pamphlet with
size four font or a two hundred page book with four languages. Even when ample
instructions are included, they are written in such technical terms that they confuse even
the most literate readers. This confusion, the difficulty of understanding the instructions,
is where the problem lies. Many people will not buy newer technology because they will
not know how to operate it. As just a few examples, CD-Recorders, DVD Players, MP3
Players, TiVo’s, even TV’s are becoming so technical that they are hard to use. Some
entertainment systems have up to thirty separate wires and require professionals to install
them. Not to mention the five remote controls that are required to operate these systems.
There are universal all-in-one remotes, but what happens when one of those malfunctions?
DIEL, Inc. (Directions In Easy Language) will offer a solution to this problem by offering customized instructions for specific devices written in common terms. These
instructions will be available via mail, phone order, online download, and eventually as a
pamphlet sold as an add-on with the product in stores. The idea is that customers will
send in their instructions along with a list of what they want to do. Each set of
instructions will be “translated” into easier and understandable terms, sent to the
customer, and then uploaded to an online database for other users to purchase. (The
instructions uploaded will be full instructions and not just customized instructions. This
will allow for other customers to take advantage of previously “translated” instructions.
SWOT Analysis Strengths
The main strength of DIEL, Inc. is that it is based on a new and innovative idea
that has not yet hit a market that needs it badly. This fact alone gives us an edge that can
take electronics to a whole new level. Another strength will be low operating costs
obtained from using college student interns to write the user friendly instruction. DIEL,
Inc. can hire “technically adept” students who don’t necessarily have a degree and can
pay them less than workers who do have degrees. In addition, today’s global
marketplace transforms the traditional need for a physical location into the freedom of
working from anywhere in the world. This global marketplace provides another strength in that DIEL, Inc. will have the ability to meet anyone’s need from virtually anywhere
Internet access is available.
No one wants their company to have any weaknesses, but nothing is perfect from the start. DIEL, Inc. has some “challenges” that face it currently. One weakness that
must be dealt with is lack of brand awareness and name recognition. Getting name recognition and awareness of our brand will require time and considerable promotional expenditure. Another weakness concerns organizational staffing. Our young staff is highly knowledgeable, but slightly lacking in true experience. Also, the subjective nature of our results could hinder our success. If a customer tells us what they want to do, we provide instructions, and they didn’t realize they wanted something else, what we provided would be viewed as incorrect.
The opportunities that await DIEL are endless. One opportunity is to increase total market share for DIEL by forming direct partnerships with large retail stores, revolutionizing the ease of use of the electronic these stores sell. If DIEL catch on, there could be tremendous growth early on. The opportunity for publicly traded common stock and then for stock options for our executives looms right around the corner. In any case where you are the first to do something, you can’t limit the possibilities for growth as long as you do a good job from the start.
Our most important threat comes from the manufacturers of the products we are providing DIEL for. If we grow, they may try to claim rights to the instructions. Another situation would arise if the companies themselves get the idea to make it easier on their customers by offering their own form of a DIEL as well as more technical and confusing instructions. In more current terms, a sudden increase in requests could overwhelm our small staff therefore cutting into profits because more staff would be hired to cover those requests.
Target Market and Customer Analysis
The target market for DIEL, Inc. is primarily the baby-boomer generation. These consumers are between the ages of forty and sixty-five and have moderate-to-high income levels. This is a large group of consumers that is educated, successful, and generally “empty-nesters” who do not have younger children in the home. These
consumers also have very busy lifestyles and often stay in the work force until they are in their mid-sixties. They have the means to purchase electronic equipment and other technology, but either don’t have time to learn how to use these items, or don’t have the technical knowledge required to use them. These are people who might, without this product, call on a child, grandchild, or younger co-worker or neighbor to help them with their gadgets, but would rather have a simpler way. We are also targeting mothers and small businesses.
Consumers of technology who fall into this market segment are influenced to buy DIELs by price, ease of use, and convenience factor. The end user is actually the person responsible for making the decision to buy the electronic device, as well as the decision to purchase the simplified DIEL. The customer will generally buy one DIEL at a time as they acquire new electronic products. Initially, it will be sold via mail, phone order, or Internet download. Eventually, the product will be packaged with, or in close proximity to electronic devices in major retail stores. Baby boomers are retail shoppers, but have also increased their use of the Internet to make purchases, thus the Internet download option for the DIEL. A promotional campaign would be effective to make consumers in the target market aware of the new product.
These consumers did not grow up with electronic devices. As a result, they do not understand how to use a complicated electronic device such as a digital camera or DVD recorder. In addition, this segment represents the most affluent part of the market.
Mid-size corporations often need to make use of sophisticated electronic hardware to make their businesses run smoother. However, these business are large enough to buy the hardware they need, yet small enough that having a full time IT staff would not be
cost-effective. Receiving low-cost, customized instructions for their electronics would make it easier to educate their employees on the technology needed to do their job, but also would be cost-effective.
The baby boomer generation will be the most attracted to this product because it simplifies life and they generally have a very busy, active schedule. Also, these consumers have seen at least modest success in their careers and have disposable income to spend on electronic devices, as well as simplified instructions for their use.
Differentiation and Positioning
DIEL, Inc. does not have any direct competitors, and only a very few indirect competitors so differentiation will not be difficult. This is a unique product that has not been tried before. The primary differentiation characteristic will be simplicity. Therefore, our product will be positioned as an easier to use alternative to manufacturer provided instructions, and as a way for consumer to simplify their lives and add value to the equipment they already own or desire to purchase. When a consumer hears the name of this product, they should immediately think of simplicity and ease of use to make their busy lives a little bit easier.
Our product is a more user friendly instruction manual for electronic products. DIEL is new; no one has come up with it before, and most people won’t know it exists.
When someone goes to the store to purchase a new TiVo recorder, they will not think to ask for a set of Directions in Easy Language, they will just look for the TiVo product and be on their way. Because DIEL is in the Introduction stage of the product life cycle, our strategy for the product type is to treat it as an unsought good at first. This will require advertising on websites and television and personal-selling support from the salespeople in stores.
Because our product is new, it is very important to create the right packaging and brand image in order to catch the attention of the customer. We also strive to catch the salesperson’s attention too because they have to be convinced of the idea before they will sell it confidently. We chose Directions in Easy Language because the name itself is what our product is in easy language. It also makes a nice acronym and sounds a lot like you are getting a “deal.” The “packaging” for DIEL products is basically the front cover
of the booklet, and will be colorful with an attractive pitch on it.
Although there is no direct competition, DIEL, Inc. will be differentiated by its performance quality at a high level. We chose not to go for superior level because there are some products that require a knowledge of the technology by the user and cannot be completely conveyed through instructions. A high level of performance quality, however, will allow our customers to want more DIELs for their other products.
Today’s instructions for electronic devices come in a variety of ways: Tiny pieces
of paper that fold out into poster sizes with miniature print, 100 page books with bindings, CDs with text files on them, or even none at all. DIEL will set it up a little differently. The table of contents will not be organized by the part of the product, but by subject of what you want to do. For example, for TiVo, the subjects in the table of contents could be: Record a show for later, Pause a show and resume later, Record two shows at the same time, etc., not: Remote, Power Supply, Cables, etc. This feature will make it easier to operate the basic functions most people want to use. And, as the name says it, this ease of use is DIELs’ most important benefit.
Because our target markets are primarily baby boomers, mid-sized corporations, and older adults, DIEL, Inc. looks to create a penetration pricing strategy that will make
our product available to everyone and will capture the market share for this type of product. By setting a low price, more people will be inclined to purchase them as a supplement to their product. If a salesperson said,”Excuse me, would you like to
purchase the DIELs for this product for $29.99?”, the customer would be much less likely to purchase it than if the salesperson said, “Excuse me, would you like to purchase the DIELs for this product for $5.99?”
Because the quality of our product is in the information printed on the paper or in a digital file that is to be downloaded, our variable costs are not very high. For a paper copy, the variable cost would be the cost of the paper and printing and the shipping, if shipped. A digital copy would have no variable cost. Also, because multiple customers may want the same DIEL, the cost after the first one is written is dramatically lower.
DIEL, Inc. will use a value pricing method because it goes along with our penetration strategy. We want to attract customers and gain their loyalty by charging a fairly low price while offering a high-quality, and high-value, product.
Because our product is directly related to the consumption of electronic devices, we know that there is a seasonal pattern that leans heavily toward Christmas. We plan to get our product out there a few months ahead in order to let customers get a feel for DIELs. Because our demand relies on the demand of electronic devices, we can base our forecasting off their numbers. Obviously, not everyone purchasing an electronic device will want a DIEL, but we can still work with it. For 2007, when we are not located in stores just yet, we expect orders to be around 8,000. This number is low because we realize the introduction stage of DIEL’s life cycle is concentrated on just getting out there and becoming known, not taking over by storm. The internet will be our main venue for advertising.
DIELs will come in slightly varying prices. A custom, first time written set of instructions will be $8.99. The second time that set of instructions is purchased, it will be $4.99 for a digital copy and $5.99 for a paper copy. According to our penetration strategy, the more we make and the less expensive it becomes to make them, the lower the price will go.
Because we, DIEL, Inc., have chosen a penetration pricing strategy, we are also
planning an intensive distribution strategy. We want to get as many customers as possible as quickly as possible. Our growth initially determines how easy it will be for us to place our product in stores and possibly directly with products in their packaging. Intensive distribution for us, at first, will be placing DIELs on as many websites as possible.
In the future, that intensive distribution strategy will expand to stores such as Best Buy, Circuit City, Comp USA, etc. The only reason we would ever change that strategy to selective is if a particular store wanted to offer us a deal to have exclusive use of the product with their products.
As stated before, DIEL, Inc. will initially be based on the internet.
Advertisements on websites and reviews of the product online will be our first communication channels. Next will be magazine articles in publications like Consumer
Reports: Electronics and television commercials. Since all of the files will be digital and
physical copies will be made upon request, our only service channel will be a server with all the data on it. Of course, there will be a backup of this server and all data on it.
We have chosen to use FedEx for our shipping needs. They offer multiple
delivery types including Next Day Air, 3 Day Select, and Ground. They offer insurance,
receipt of delivery, and also deliver to P.O. boxes. Our warehousing will be digitally done on the server. We will set up an ecommerce system that will allow users to purchase and download available DIELs 24/7 and if not available, will allow them to place an order online for what they want.
Advertising is our make or break for the first few years. For this reason and the fact that our product is in the introduction stage of the product life cycle, we will allocate a large portion of our budget to advertising. It will be broken up into: Internet, Television, Physical Publications, and Radio advertising segments. Internet advertising will receive the greatest amount of the budget, with Television, Physical Publications, and Radio following in that order.
For now, the advertising and word of mouth are our main sellers. We do plan in the future to have salespersons promote DIELs as well. To include this, we would need a slight incentive for them as well. There will be a commission bonus of $1 to be paid to the salesperson for every DIEL he or she sells. This commission would run long enough for our name and product to establish itself.
DIEL, Inc. has a two-phase plan for sales promotions. Phase one is a pull or a consumer sales promotion. In this phase, the beginning, we will pull consumers to our product by positioning ourselves as a low price, value-adding product and offering a buy one get one half off deal (for a limited time). We advertise to consumers, sell to consumers, and target only consumers with this promotion. With growth we move into phase two, the push into trade sales promotions. In this phase, we send our displays to stores for free, and we also give vouchers for a certain number of their employees
(depending on the size of the store) to receive free DIELs of their choice. In doing this,
we attract the stores to us and they will, in turn, attract customers to our products.
These promotions will be second in size to Advertising in our budget. We will
not, however, implement some of these promotions until we have reached stores.
Samples if our magazine and radio ads are included in the appendix.
Five-Year Financial Projections
2007 2008 2009 2010 2011 Revenues $48,000 $120,000 $138,000 $156,000 $210,000 Cost of Goods Sold $12,000 $30,000 $34,500 $39,000 $52,500 Gross Profit $36,000 $90,000 $103,500 $117,000 $157,500 Selling & Advertising Expense $25,000 $40,000 $45,000 $50,000 $55,000 1 Rent Expense$12,000 $12,000 $12,000 $12,000 $12,000 2 Utilities$6,000 $6,500 $7,000 $8,000 $8,500 Net Operating Income ($7,000) $31,500 $39,500 $47,000 $82,000 Other Expenses $30,000 $36,000 $42,000 $48,000 $54,000 Net Income ($37,000) ($4,500) ($2,500) ($1,000) $28,000 1 – We have secured a five-year lease at $12,000 per year
2 – Assuming utilities will only increase a small amount due to increased computer usage
Breakeven Projections by Year
2007 10,667 units
2008 21,000 units
2009 23,556 units
2010 26,222 units
2011 28,778 units
Based on S&A Exp., Rent Exp., Utilities Exp., and Salaries divided by contribution margin per unit of $4.50