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

Introduction, Products/Services and Marketing Section Engineering Science 466b © J. Adams & K. Stuart : Class Objectives 1.Introduction of Business Plan 2.Product/Services Section of Business Plan 3.Marketing Component of Business Plan 4.Operating Statement

Introduction, Products/Services and Marketing Section Engineering Science 466b © J. Adams & K. Stuart 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. 11.2: Introduction/Industry

Introduction, Products/Services and Marketing Section Engineering Science 466b © J. Adams & K. Stuart 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? 11.3:Products/Services Section

Introduction, Products/Services and Marketing Section Engineering Science 466b © J. Adams & K. Stuart : Product Migration Strategy

Introduction, Products/Services and Marketing Section Engineering Science 466b © J. Adams & K. Stuart : “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

Introduction, Products/Services and Marketing Section Engineering Science 466b © J. Adams & K. Stuart : 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

Introduction, Products/Services and Marketing Section Engineering Science 466b © J. Adams & K. Stuart : 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!

Introduction, Products/Services and Marketing Section Engineering Science 466b © J. Adams & K. Stuart : 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

Introduction, Products/Services and Marketing Section Engineering Science 466b © J. Adams & K. Stuart : 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.

Introduction, Products/Services and Marketing Section Engineering Science 466b © J. Adams & K. Stuart : 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 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?

Introduction, Products/Services and Marketing Section Engineering Science 466b © J. Adams & K. Stuart : 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

Introduction, Products/Services and Marketing Section Engineering Science 466b © J. Adams & K. Stuart 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 11.12: Competition Section

Introduction, Products/Services and Marketing Section Engineering Science 466b © J. Adams & K. Stuart : 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 1 st year – monthly 2 nd and 3 rd year – quarterly 4–5 th year – annual

Introduction, Products/Services and Marketing Section Engineering Science 466b © J. Adams & K. Stuart : Operating Statement? Doyle, Figure 3.1

Introduction, Products/Services and Marketing Section Engineering Science 466b © J. Adams & K. Stuart : 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.

Introduction, Products/Services and Marketing Section Engineering Science 466b © J. Adams & K. Stuart : 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

Introduction, Products/Services and Marketing Section Engineering Science 466b © J. Adams & K. Stuart : Operating Statement? 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

Introduction, Products/Services and Marketing Section Engineering Science 466b © J. Adams & K. Stuart : Operating Statement? Doyle, Figure 3.2

Introduction, Products/Services and Marketing Section Engineering Science 466b © J. Adams & K. Stuart : Operating Statement? Doyle, Figure 3.3

Introduction, Products/Services and Marketing Section Engineering Science 466b © J. Adams & K. Stuart : 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

Introduction, Products/Services and Marketing Section Engineering Science 466b © J. Adams & K. Stuart : Next Classes Tuesday March 30 th Discussion on Market Research Report Financial Statements – Projections Investment Needs Thursday April 1 st (no joke!) Review Tutorial and Presentation Overview Personal Business Opportunity Document WEDNESDAY April 7 7:00pm Group Presentations (final class)