Strategy and Implementation Summary
Initially, by virtue of the total uniqueness of the Supreme, the reliance will be on publicity in magazines like Saltwater Sportsman, and other dedicated fishing publications, coupled with distribution through wholesalers to fishing tackle retailers in the eight most important coastal states. Word-of-mouth among the more passionate sector of the saltwater game fish enthusiasts should be sufficient to reach projected sales of the do-it-yourself kits. While this is going on, an organized approach will be followed to locate a suitable mass marketing company to license the Supreme. The eventual launching of the hook with the attached barb by the chosen marketing company should spawn further sales of the kits without any advertising or expensive promotional efforts on the part of Seacliff.
5.1 Competitive Edge
The Supreme's stem-hook system is patented (Patent Number 6,042,520, dated May 16, 2000). The product is not available from any other supplier or manufacturer. The features are clearly outlined, and the hook is visually unique as well, making the hook an ideal USP in the hands of a capable marketing specialist. Case studies of other products with well-devised USP's (having both a unique look and user-friendly features) have shown dramatic success in capturing market share from other brands.
5.2 Marketing Strategy
Considering the patented hook is so revolutionary, the initial reactions from fishermen, retailers, and other industry participants have been extremely positive. As time to market is everything, it is important not to wait until a suitable licensee can be chosen. This could take a year or more. The process of subcontracting the necessary elements forming the do-it-yourself kit, will get the hook to market within a few months, and the acceptance of the product in kit form should be a great spur to marketing candidates to consider licensing the hook.
An organized approach will be followed to locate a suitable licensee marketing company. A letter will be sent to licensee candidates. Enclosed in each letter will be a product summary. An exclusive manufacturer will also need to be found. A product summary and letter will be sent to manufacturing candidates. Phone calls will follow up the letters. The ASA Trade Show will also be a good way to attract the interest of licensees.
5.2.1 Distribution Strategy
For the do-it-yourself kits, the distribution will be traditional. Seacliff will sign an agreement with Nautical Marketing of Seaport, Oregon who will represent the kits to wholesalers. Emphasis will be placed on wholesalers and cataloguers in the eight coastal states that make up over seven million of the 9.4 million saltwater anglers. The wholesalers, in turn, will sell to retailers. Pricing has been carefully arranged to insure generous margins for both wholesalers and retailers.
5.2.2 Positioning Statement
Although the Supreme is suitable for many freshwater applications, the freshwater market is best attacked once the licensee marketing company has been located. Until then, marketing efforts for the Supreme in kit form will be focused on the much narrower market of saltwater fishermen who are especially enthusiastic about hunting for the 20 or so larger-game fish. These fishermen are more likely to read about the Supreme or to hear about it by word-of-mouth than through any other means of advertising.
5.2.3 Pricing Strategy
It is not an easy task to decide on a price for a totally unique, newly-patented item in kit form. However, there is no question that fishermen in the same market category will spend considerable amounts of money on fishing gear kits. Appendix A shows examples of such non-competing kits:
MIT Custom Rigging Kit
Includes leader, crimps, chafe tube, strand cable and swages, rigging tape and thimbles. Contains a crimper tool, a snipper and safety knife. As advertised in Melton International Tackle Catalog, it is priced at $225.
Ultimate Rigging Kit:
For double rigging riggers. Includes release clips, cork balls, black snubbers with stainless pulleys, nylon line and leader snaps. As advertised in Boater's World Marine Centers Catalog, it is priced at $129.99.
Big Game Rigging Kits:
Includes large press tool, small press tool, 100 sleeves and thimbles of various sizes, monofiliment and stainless cable and three color tapes. All in carrying case with vinyl mesh back and clear front with velcro flaps. As advertised in Boater's World Marine Centers Catalog, it is priced at $239.99
The pricing structure follows a retail cost model which is fairly standard in most industries. The manufacturer's sell price to the distributor is approximately 55% off the retail price.
Retail sell price
|Retailer cost from wholesaler|
|Wholesaler cost from Seacliff|
|Less terms (2% 10 net 30)|
|Less freight (5%)|
|Less representative commissions (7.5%)|
|Net price to Seacliff|
(See Appendix B for price lists for Distributor (wholesaler) and Dealer (retailer)).
**appendix were not available for this sample plan.
5.2.4 Promotion Strategy
No large budget has been provided for promotional efforts, but we have set aside a small budget for point-of-sale materials. The strategy is to hold off on these expenditures. Once a licensee marketing company has been located, their efforts to market and promote the Supreme will be more than sufficient to get the word out to all fishermen.
5.3 Sales Strategy
The sales strategy is to rely as much as possible on the traditional distribution channel members (wholesalers and retailers) and to minimize the number of direct sales. Seacliff's forte is more in the direction of formulating ideas worthy of patenting rather than administrative expertise. In addition, Seacliff will engage the services of a manufacturer's representative to out-source, to every extent possible, sales reliance on Seacliff. Sales invoicing should be in only large quantities, such as a recent order for 250 kits.
5.3.1 Sales Forecast
Unit Sales of Kits:
Marketing research indicates that approximately five million saltwater fishermen hunt for the 20 or so large game fish. These fishermen are especially enthusiastic about the sport, and are relatively easy to reach as they are concentrated in only eight coastal states. We estimate 25,000 kits can be sold over the next three years to this market group alone, which works out to only one half of one percent. We will assume one quarter of these will be sold in the first year, one third in the second year, and the remainder in the third year. We will not attempt to project monthly sales differences, but will assume sales are steady throughout the year.
It is expected that other items will be sold such as replacement barbs for the kits, crimping tools, etc., but these are primarily minor items. They will be ignored in this original business plan, but will probably be included in updates once more exact trend information is available.
Unit Sales Prices
Direct Unit Costs:
The direct units costs pertain to the various items that comprise the Proline Kit, the fulfillment costs of assembling the various items into the kit, and the outer carton used to ship the kits to wholesalers, retailers, and/or individual consumers who purchase by mail or over the Internet.
- Bags. These are clear, plastic, re-sealable bags to hold the Supremes. There are 10 Supremes per bag. The bags are printed with the company's fish logo giving the size of the Supreme. The bags are provided by Uline Shipping Supply Specialists. Price is $66 per 1,000, assuming 20,000, order plus $100 set-up charge, and $50 for each of three color changes. Four bags per kit at $0.097 each (4 x .097 = .388 per kit). Four weeks lead time when ordering.
- Barbs. These are the Supremes. They are provided by RCI Wilmette, Illinois. They come in four lengths and each kit contains 10 of each size:
|Size||Cost per 1,000||Cost per Proline Kit|
|TOTAL||$3.38 cost of barbs per kit|
There is an initial tooling cost of approximately $25,350, which will be included in the pre-production expenses and amortized over the first five years. Allow 10-12 weeks tooling lead time, and two to three weeks lead for orders.
- Crimping Tool. All are stainless, and are supplied by Freil Specialty Tools, Kansas, Missouri. The tools are quoted at $3.89 each, assuming an order of seven gross (144 x 7= 1,008) plus shipping and handling ($100), total per unit cost will be $3.99. Allow a two to four week lead time.
- Kit Bag. The kit bags come from Octagon Products of Eugene, Oregon and cost $6.50 each, assuming a purchase of 1,000. Allow two to four weeks lead time.
- Paper Mixing Pad. Provided with the kit to mix the epoxy and hardener on. The supplier is Tisbury Printers and cost $.30. Allow two to four weeks lead time.
- Drying Pad. This is a 5/8" thick closed cell rubber foam block used to hold the barbed hooks up in the air until the epoxy has dried. Also supplied by Greene Rubber Products and cost $.35 each. Lead time, allow two to three weeks.
- Epoxy. Supplied by Chilton Industries Inc. of Ashland, Long Island. It is supplied in five-gallon buckets (four colors: teal, red, cobalt, and black). It is $63.98/gal. Each kit contains 1/2 oz. tube of each color. Cost per kit, assuming 128 oz. per gallon. Cost per ounce $.50, cost per kit $1.00.
- Hardener. Also from Chilton Industries. Cost $178.95 per gallon. Sold in five-gallon buckets. Each kit contains two one-ounce tubes of hardener. Cost per ounce is $1.40, cost per kit is $2.80.
- Tubes. Supplied by Tripex Los Angeles, California. Six are needed per kit. Cost $278.00 per 1,000, cost per kit $1.67. These are rather light but bulky items, add 10% for shipping. Cost per kit is $1.84.
- Filling of Tubes with resin and hardener. This will be done by Lucaplan Labs in Columbus, Ohio. Cost: $0.50 per tube ,plus $10 for pallet wrapping. Per kit cost $3.00, assume $3.50 with wrapping and shipping charges.
- Stirring sticks. Approximately 30 small plastic sticks will be bundled and placed in each kit. Supplied by Sysco Restaurant Supplies. Approximately 60,000 will cost $30.00. Price per kit: approximately $0.02.
- Instruction Card. A plastic laminated card with instructions and warranties will be enclosed in each kit. They will cost $.50 each.
- Label. To be sewn onto kit face. Estimated cost, $.50 each.
- Outer carton. Each carton to hold six kits. Cost $.54 each, cost per kit $.09.
- Zip Lock Bag. Each kit will be in a separate bag with a hole at the top for placement in a retail wire hook. Cost is $82, cost per kit: $.32.
- Fulfillment. This is the cost of assembling the kits. This will be done by Antique Industries in Salem, Oregon for $1.00 per kit.
Total Unit Costs: $26.48 per kit
Royalty income is very difficult to predict because the royalty percentages can range widely. We have chosen three percent which is at the low end of the royalty percentages spectrum. We have assumed that this income will not begin until the second year (2002) of operation. We have estimated a total potential for the U.S. alone of $300,000 annually. We will assume a royalty of $50,000 in 2002 and $75,000 in 2003. This revenue is net of any related costs.
A major milestone is the securing of financing. Borrowing will be necessary either through the Small Business Administration (SBA) or alternative sources. It may be possible to arrange for some of this amount to be financed by the subcontractor of the barbs. The funds need to be committed to by the end of November at the latest.
The next step is to order the materials necessary for making up the kit and to have the kits ready for sale. This will take 45 days, and will begin when financing has been secured.
Joining the ASA is important, as is signing up for the ASA Trade Show in Las Vegas in July. Both of these things can be arranged in December, 2000.
An exclusive manufacturer needs to be located either domestically or internationally before March 2001. This should be an easier task than finding the right marketing company.
A licensee marketing company needs to be found who is willing to commit the resources necessary to mass market the hook. A short list should be found soon, initial contact made, and follow-up phone calls placed. Meetings at the trade show will be indispensible and will prove to be very profitable.