Sun Heat

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Solar Water Heater Distributor Business Plan

Strategy and Implementation Summary

Sun Heat has two competitive edges to gain market penetration. The first is the ability to serve both the DIY and the professional install market. No competitors do that. The quality of Sun Heat's systems will also allow the company to expand market penetration. Marketing will be focused on education about the environmental and economic benefits of installing a solar water heating system

5.1 Competitive Edge

Sun Heat has two competitive edges that will distinguish them from the competition. First, Sun serves both the DIY market and the professional install market. This is a competitive edge because Sun Heat can reconfigure one product for both market segments, immediately increasing the number of potential customers, at minimal costs to Sun Heat. The equipment is the same with minor changes to packaging and installation instructions. The DIY system will also include some tools.

The second competitive edge, related to the first is the benchmark level of product quality for the DIY customers. By serving the two markets and meeting the need of a high quality product for professional install segment, Sun Heat is able to then offer the same high quality product to the DIY segment. Currently, Sun Heat competitors only offer DIYers very basic models whose quality does not approach Sun Heat's.

5.2 Marketing Strategy

Sun Heat's marketing campaign focuses on raising awareness about the environmental and economic benefits of having a solar-based water heating system. Environmental benefits include using a renewable resource and no toxic discharge or emissions, thus allowing individuals to make serious commitments to the Earth. Customers will also enjoy the economic savings afforded by a solar water heating system.

Sun Heat's marketing will focus on advertising and trade shows. In each of these venues they will target the DIY and professional install markets along with retailers carrying Sun Heat products. In addition, Sun Heat will develop relationships with utilities in an attempt to offer rebates or other financial incentives for utility customers using the alternative energy source.

5.3 Sales Strategy

The two-part sales strategy addresses each customer segment. As mentioned in the previous section, to reach the DIY segment, Sun Heat will work with retailers selling DIY units to inform them about the product and its superiority to the competition. Retailers sell the DIY units, it is important to have good relationships with them and to support them with as much information and resources as possible.

Sun Heat is in the process of developing a licensing program to address the professional install market segment. This program includes product information, installation training and certification of installers. The licensing program is the foundation of the relationship between installers and Sun Heat. To support this relationship, Sun Heat assigns each installer an account executive for technical support. By offering this unmatched assistance, installers will more readily recommend Sun Heat, thereby driving sales.

For the professional install market, participation in trade shows will be the first step in the relationship between Sun Heat and the installer. In order to develop a strong network of installers, Sun Heat will offer an excellent margin system to installers using Sun Heat units. The margin will be similar to the margin that Sun Heat offers the DIY retailers, so for every sale that the installer makes, he makes a commission as well as revenue from the installation. This system provides the installer with an incentive to recommend Sun Heat over the competition. Installers will be sold the product on credit with enough time for them to collect from their customer before paying Sun Heat. Promotions will be used to help generate sales and will typically occur during the trade shows, giving Sun Heat an opportunity when they are face to face with the installer. High quality sales literature will be passed out to each customer segment illustrating the superior quality of Sun Heat products.

5.3.1 Sales Forecast

As a start up organization, sales will increase in a slow but steady fashion. Sun Heat has adopted a conservative sales forecast to increase the likelihood of reaching the goals. Please review the following table which provides detailed sales information by month for the first year and yearly forecasts for the following two years. Following the table are two graphs, one for sales by month, the other is sales by year.

Sales Forecast
Year 1 Year 2 Year 3
Sales
Professional install $131,573 $216,025 $279,887
DIY $108,736 $187,942 $243,502
Total Sales $240,309 $403,967 $523,389
Direct Cost of Sales Year 1 Year 2 Year 3
Professional install $59,208 $97,211 $125,949
DIY $48,931 $84,574 $109,576
Subtotal Direct Cost of Sales $108,139 $181,785 $235,525

5.4 Milestones

Sun Heat has several milestones to use as goals for the organization. The following table details the pertinent information.

Milestones
Milestone Start Date End Date Budget Manager Department
Completion of business plan 1/1/2003 1/15/2003 $0 Sara Marketing
First large DIY contract 1/1/2003 4/30/2003 $0 Sales Department
Revenue exceeding $200K 1/1/2003 11/1/2003 $0 Sales Department
Profitability 1/1/2003 3/1/2004 $0 Sara Department
Totals $0