The primary focus for Bizcomm's marketing strategy must be to increase sales and profitability in its core card business quickly without resorting to the expense of direct mail flyers that have not been thoroughly market-tested. This can be achieved by gaining entry into the large business supply retailers, and to take the necessary steps to make Bizcomm's website a useful sales generating tool.
The advantages Bizcomm has over the competition are numerous:
The first strategic move for Bizcomm must be to improve its website. An amount of $5,000 has been set aside for this purpose. A contract will be signed by the end of February, 2000, with completion due by the end of April in that same year. Assume 50% payable at signing and the rest upon completion. The site must have a shopping cart capability to allow on-line secured credit card transactions. Bizcomm's in-house designer has had some formal training in this type of work, and should be able to cooperate effectively with the person chosen to construct the site.
It is essential that care be taken to cause the most important search engines to find Bizcomm's website using a variety of key words. Multiple hostings are likely to be necessary to accomplish this. Similar skill needs to be undertaken to bring many more visitors to Bizcomm's site from the online store.
While the above work is being done, Bizcomm must immediately take steps to enter the retail market with several of Bizcomm's most popular Slida-Card® products. There are more than five million small businesses in the United States with sales of $1 million or less. These five million businesses are in addition to the industries that are normally targeted by Bizcomm and its competitors. An initial brief investigation of the retail shelves at large discounters indicate that this level of retail is appropriate for these limited products. To dedicate the proper time and effort to this launch, $5,000 has been ear-marked for a consultant who will research the appropriate outlets and put together prototypes of attractively packaged cards, working in conjunction with Bizcomm's in-house designer. The consultant will need a full month to handle the project and get the finished packets in front of the right people. Sales are expected to begin in April (90,000 cards monthly). This is not overly ambitious considering the size of the potential market. Unattractive cards, without business card slits, are presently on the shelves aimed at this very market. Since Bizcomm can print its own cards, this gives Bizcomm an advantage over the competition. The important thing to remember in this market strategy is that the first one to devote the time and effort to the large discounters is likely to shut out the competition. Another important aspect of this retail launch is the residual effect of extensive retail sales. The brand name, Slida-Card®, will gain greater exposure, and Bizcomm can insert a small leaflet that informs the buyer of other available products. Here, Bizcomm can list in a brief, attractive way the customized options that are available, and give phone numbers and refer to the website. The advantages of this manner of reaching the interested businessman are many:
The above advantages far out-weigh any fears that the large retailer may eventually squeeze Bizcomm on price. Even if Bizcomm were to break even on the retail card packets, the leads generated from them will be substantial.
A longer-term market strategy will require some extensive research to locate at least one business communication market sector that is at present:
After locating the perfect market sector the task then becomes to design and structure specialized business communication solutions, specialized printing needs, and ad specialties targeted to this market sector(s) in such a concentrated and thorough way that "generic" business communication products will not have a chance to compete.
Apart from distributing Bizcomm's products (only a few popular generic Slida-Cards®) in the retail market, other new channels will be considered on an on-going basis. Bizcomm could, without a great deal of expense, get a brochure together for distribution to ad specialty dealers. There are 17,000 of these dealers. A limited mailing will be done to test the waters first.
In performing the research to locate an ideal market sector, ripe for market segmentation specialization, Bizcomm will keep an eye peeled for publications that already cater to specialized markets. This will help the company know what is attractive to customers.
The specific marketing programs discussed in this plan are:
Pricing strategy does not appear to be a major consideration. Management, who determine prices, will listen to the opinions of the telemarketers who are more likely to know when Bizcomm is at a disadvantage in respect to the competition.
Bizcomm has a telemarketing department that operates satisfactorily. Each member is adept at making sales. Once this plan's market programs are installed, closing sales deals over the phone will be much more efficient, and there will be many orders to come through the website.
To simplify sales projections, we will project only three items: The core business in the form of mail-order Slida-Card®; the same product sold via large discounters (BJ's, Cosco, Staples); and Commercial Printing.
Slida-Card®: This core business, generated by telemarketers and mail-order, has various price levels beginning at $89.50 for 125 cards and extending to $369 for 2,000 cards. The price per card varies widely from $.71 per card down to $.18 per card. Historically about 10% of sales are 125 counts, 10% are in 250 counts, 40% in 1,000 counts and the remaining 40% in other counts. For the sake of ease of projections we will assume that all sales in this core business are in 1,000 counts ($0.199 per card). In line with recent monthly sales figures we begin by projecting monthly sales (January-April 2000) at 135 units of 1,000 cards at $199 per unit (zero growth rate).
Beginning in May, 2000 positive results should appear from the website, the improvements made to the Yahoo! Store, and from leads for custom cards generated by the retail sales. It is not easy to predict how many inquiries for custom cards will be generated by the purchase of 150 retail packets of 20 cards daily. However, all of these buyers are purchasers of the product. It seems reasonable that a much larger percentage will result in a custom card order than could be hoped for from a blind mailer. Assume one order of 1,000 custom cards will result from the sale of every 150 retail packets. This means sales of 30 units a month (1,000 equals 1 unit). Results from the improved website and Yahoo! Store are also very difficult to predict. Assume another 15 units per month beginning in May 2000, increasing to 20 in June, and again to 25 in September as more orders for custom cards are fed by the retail packet leaflets.
Costs of materials per unit are as follows:
Large Discounters: Retail packets of 20 cards and envelopes will be produced and priced to sell at the retail level @ $3.29, and to wholesale to large discounters at $1.65 which works out to be $82.50 per thousand cards. Sales will begin in April, 2000 at a rate of 3000 cards daily or 90,000 per month. The cards will be sold in packets of 20 cards which works out to only five packets per day in 30 outlets.
The same basic costs of material apply here ($19.50 per 1,000), but there will be additional packaging costs from shrink-wrapping each packet of 20 cards, as well as some special handling. This handling and processing will be done by an outside service provider (Goodwill Industries, the ARC, or other similar organization). A generous allowance of $1.50 per 1,000 cards will be assumed. Total material costs per 1,000 cards = $21.00.
Commercial Printing: Commercial printing work is, at the time of this writing, averaging about $27,000 monthly. Some of this work is handled on Bizcomm's own printing presses, but the majority of it is farmed out to other printers. Assume this level will continue initially. Sales level at $27,000 monthly. Gross profit varies widely from 70% profit on the small jobs to 35% gross profit on the large jobs. Assume large jobs represent 50% of the total. Units don't apply here. Assume one unit per month of $27,000 with a material cost of $12,825 (weighted average of 47.5%).
The following table shows some key milestones.