Strategy and Implementation Summary
Our strategy and implementation will be a very straightforward approach to extending our products and services to potential clients via every cost-effective approach possible. Our combined services offering is very unique, and allows for more profitability while staying ahead of other industrial distributors and services providers in terms of delivery and competitive pricing. The combination of our distributorship’s solid inventory, and the ability of the service area to provide re-conditioning and special services to industrial products quickly, allows for faster shipments with fewer logistical problems. For our customers, this means lower costs.
Presently, the local industrial suppliers and service providers do not really provide an effective combination of supplying a cost-effective service strategy that yields the customer any real savings. The local distributors must also rely heavily on outsourcing for many of their services, which drives up the shipping costs to the customer dramatically.
This business plan allows for low-cost implementation of Internet-based customer access, as well as direct marketing where needed. The plan also focuses on the needs of our clients, working within particular parameters that permits the business to respond to small and large clients equally efficiently.
5.1 Value Proposition
JTB’s value proposition is very simple: providing quality and service that meets the customers’ requirements. Our value proposition happens naturally within the JTB divisions; whenever possible, we attempt to utilize our own in-house skills to meet our customers needs.
When accomplished in-house, the value turns into a quality product or service for a reduced overall cost to the customer. Simpler logistics means faster overall services at a reduced cost.
5.2 Competitive Edge
JTB’s combined competitive edge is an overall approach to marketing our goods and services to many different industries. Our unique approach of developing our own branded sales and marketing applications will strengthen our ties to our manufacturing partners and direct clients.
As computer networking is a strong area for me personally, I see the benefits to businesses that have solid, network-based sales and marketing tools in place. Overall, our goal is to utilize our own applications and developed credibility to share our inventory and other services. When completed, JTB will be able to offer much larger clients an extremely large variety of products and services. When presented to these clients in the form of a Web-based purchasing system, it will offer easy integration into their purchasing needs at little or no cost to them, accessible 24 hours a day, 7 days a week.
All of the JTB divisions will benefit from the marketing, strategic ad placement and direct marketing products offered by each of the JTB divisions.
5.3 Marketing Strategy
Key Goals to our marketing plans are as follows:
- Develop a high-profile sales environment, to bring our products to new and existing clients.
- Develop new ways to market our products to potential clients via our branded applications and credibility.
- Develop manufacturing partnerships utilizing our Web-based applications.
- Develop and maintain a high-quality customer service and follow-up program for all of the JTB divisions.
- Develop and utilize an ongoing automated marketing system to contact potential clients.
- Carefully target marketing expenditures to maximize returns on the campaigns.
5.3.1 Pricing Strategy
The industrial sales division will index its pricing against the well-known industrial product catalogs as a benchmark for pricing references. While it is true that these giant catalog companies enjoy better distributor discounts when they make their purchasing arrangements with suppliers, it’s also possible to use their printed prices as a benchmark for our clients to make comparisons with, when they purchase from us. Unless the item is a complete special, or a special standard, it may be found in a catalog somewhere providing us with a good reference index to work from while calculating our discounts on list prices.
In general, it is usually fairly easy to compete in both the catalog business and the industrial sales business in terms of percentages, but we will not structure our pricing to give the house away. What will set us apart is the services offering following the sale. We will generate additional revenues by servicing the distributed products, thus another sales point to be made as well. “Not only can we sell you the new products you need, we can service them in-house as well.”
5.3.2 Promotion Strategy
JTB Industrial Sales will promote sales and specials via the Internet, faxing, mailed sales literature, and printed media sent to the customers with our boxed shipments. Our integrated marketing systems will e-mail buyers about current promotions. Our system will also match these promotions with our clients’ previous purchases customizing our promotions for returning purchasers. Our other divisions’ customer databases will be accessible by the industrial sales division’s staff as well, allowing further solicitations into new markets and clients. With tailored promotions, we hope to gain a large promotion-based clientele, that hopefully yields many return customers to further develop our long-term return customer base.
All of our media marketing products and custom-developed applications can be offered on a trial and demonstration arrangement. Promotional strategy will include a 100% performance guaranty with a money-back offer. Part of our strategy is to develop the products in such a way that modules can be added when the client would like additional features. All of our products will have a help and support area with 24 hour access. This will also allow a no-cost, Web-based demonstration and product marketing environment.
5.3.3 Distribution Strategy
JTB will implement a distribution system developed by our Integrated Technologies Division, which provides the necessary real-time ability to share our inventory online with other suppliers and customers. With the real-time capabilities mixed into our Web-based applications, we will be able to work very closely with our manufacturing partners to fill orders, receive orders, and process requests for a quote. With the ability to extend ourselves with these customized applications, we can actually develop partnerships with any vendor who wants to share their inventory.
With order fulfillment as the major priority behind developing this system, we will work to integrate our clients needs with our abilities, and the abilities of our distributor partners to fulfill our clients’ requirements.
5.3.4 Marketing Programs
- Internet based industrial website banner Ads. As we develop our industrial Internet marketplaces, we will place ads into our sites and many other industrial products’ sites as well.
- Promotional, e-mail-based product e-flyers. As we collect users at our sites, we will build a sales process of delivering e-mail-based promotions to our visitors, highlighting our products and services.
- Catalog supplemental flyer programs delivered with all shipments. Our shipping department will include inventory specials with all boxed shipments to our clients, saving much of the mailing costs.
- Fax-based special promotions. When allowed, we hope to target purchasing agents and buyers with our specials. In all cases and methods of delivery, we can build a promotional special to target our clients’ purchasing history.
- Direct telephone solicitation while taking orders. Our sales staff will close all order calls with a quick overview of our sales specials.
5.3.5 Positioning Statement
Our positioning strategy combines our individual divisions’ strengths, directly marketing each division’s capabilities in an overall fashion to our intended clientele. Further development on this will be implemented through cross marketing our services to established divisional clients. Our integrated technologies will place our business directly into the individual marketplaces, allowing for direct access when potential clients are seeking products and services.
Additionally, our catalog program will also keep the business in direct competition with the larger catalog businesses; our highly-respected products and services will generate a large long-term customer base.
5.4 Strategic Alliances
JTB will develop and implement many strategic alliances to build its product and services offering. Alliances to manufacture our higher volume products will aid in keeping our internal costs in check, while allowing unlimited growth potential by utilizing our distributor partners production capabilities. Further development will include purchasing on a contractual basis, to help lock in pricing on our product offering. Our distributor partners will allow us to offer additional products and services that we could not otherwise offer, also reducing our investments in additional personnel and equipment while maximizing profits.
JTB’s Integrated Technologies division will develop long-term relationships with many media developers, to provide our clients with a broad offering of products and services. Our developer partners and technology suppliers will be hand-picked for their products and capabilities. Our main goal while developing our strategic alliances is to select the best possible providers we can locate. When developed, JTB will utilize our business development applications to network with our clients, and distributor partners to create a unique collaborative environment capable of providing the needed input to fulfill and complete our media projects.
5.5 Sales Strategy
JTB’s Industrial Sales Divisions strategy is summed up in three words: Marketing, Engineering, and Sales. Our unique marketing environments will allow established and potential customers cost-free access to our products and services via Phone, Fax, EDI, and the Internet.
Customers can access their accounts via the Internet to review purchases, request quotes, and place orders. Pre-sales engineering will be available when consultation is needed. JTB will develop online databases about the products we represent; the same database will be available to our staff when conversing with clients about projects. CAD and other engineering software will work out potential issues on specialty projects prior to ordering. After the pre-sale process is complete, the staff will generate a formal quote to be sent to the client in the format they prefer.
The most prominent components of our sales process are ease of use and a knowledgeable staff to promptly fulfill orders. Having purchased from all types of businesses, including cutting tool manufacturers, industrial distributors, and industrial catalog houses, JTB will blend the best features from our purchasing experiences into a comfortable, customer-oriented purchasing environment.
5.5.1 Sales Forecast
JTB’s Industrial Sales Division’s forecast highlights the key products to be initially offered. Remaining flexible, management will be seeking additional avenues of business to develop, adding further sales capability. We feel strongly about developing a very good local customer base, allowing quick growth and establishment of cash flow. Additionally, we anticipate better margins as we become established as direct distributors for many of the lines we would initially offer from catalogs, and through out-of-state purchases from other distributors.
Our sales forecast has an average margin of 36%. As an established direct or stocking distributor we previously had discount arrangements of up to 68% off list pricing these changes would result in an additional 15 – 30% reduction in our direct costs of goods picture.
JTB’s Products and Services Division: Many of the services provided are billable hourly at nearly $60.00 per hour for service work. In comparison, some products manufactured internally will need to be at a lower shop rate to provide for more competitive pricing to break into the different markets. We will work to have many of the patented products manufactured externally, allowing our equipment to be utilized on more profitable work. Contingencies need to be in place to backup all products and services offered in the event of personnel issues, or equipment failure. These factors all affect the break even analysis as well. If we were producing only one or several product lines you could show controlled costs vs products manufactured. This plan however provides additional and substantially more profitable services to all of the clients utilizing our products and services. The services are both fixed price list services, and billable hourly for special work.
With potential clients and distributor partners numbering near 330,000, the sales forecast for JTB’s Integrated Technologies Division looks strong. As we are developing our own products and services for resale, and in the form of renewable subscribed services there is a substantial amount of market available. With the average business spending approximately $3,000 or more annually, this quickly becomes a $990 Million marketplace.
Our sales forecast table uses the following assumptions:
- Metal Tools average growth rate of sales 29.5% annually.
- Commercial, Contractor, Utilities average growth rate of sales 25% annually.
- Safety Products average growth rate of sales 66% annually.
- Work Holding Products average growth rate of sales 49.3% annually.
- Precision Measuring Products average growth rate of sales 49.3% annually.
- Catalog Industrial Products average growth rate of sales 34.3% annually.
- Specialty Purchased Components average growth rate of sales 66.7%
- Tool related Services average growth rate of sales 34.5% Annually.
- Industry Analysis Compound Annual Growth Rate of 7.02%.
The sales growth is affected by numerous factors including:
- JTB’s ability to quickly develop its internal sales staff.
- JTB’s ability to rapidly redevelop management’s previous industry-relations channels.
- The development of the JTB Products and Services Division’s services.
- The development of JTB’s Business Development Division’s marketing products.
|Year 1||Year 2||Year 3||Year 4||Year 5|
|Industrial Sales Division||$206,525||$347,300||$433,420||$542,963||$674,518|
|Products and Services Div||$354,705||$461,550||$601,569||$729,944||$902,842|
|Integrated Technologies Div||$23,204||$199,948||$268,330||$331,797||$443,411|
|Direct Cost of Sales||Year 1||Year 2||Year 3||Year 4||Year 5|
|Industrial Sales Division||$128,259||$212,185||$263,461||$315,420||$407,383|
|Products and Services Div||$199,051||$229,974||$279,739||$342,839||$419,700|
|Integrated Technologies Div||$8,448||$35,795||$55,219||$66,051||$90,527|
|Subtotal Direct Cost of Sales||$335,758||$477,954||$598,419||$724,310||$917,610|
Secure Leasing, Banking, and Attorney Arrangements – Long term arrangements to secure the equipment financing, banking relations, and general and patent attorney needs.
Setup JTB’s Industrial Services Location – Prepare working area for incoming equipment, wiring, shipping and receiving areas, networked accounting systems, and develop a work flow methodology for the entire shop.
Complete the equipment selections and installation – Equipment will be selected from various machine tool dealers throughout the U.S. These machine tools will be inspected closely for quality, selecting the best possible pieces while working within our budget.
Contractor selection for outsourced manufacturing – Competing contract manufacturers will be providing sample parts and quotations for our products. In particular, contractors will be quoting on the Automotive and Sporting Goods lines, as they have the highest potential volume and will require substantially more manufacturing capacity than we will have available.
Contracted Application Developer selection – JTB will contract for a long-term relationship partner seeking a progressive, well-established multi-talented individual to create the desired P.C.-based business applications we plan to develop as part of our product offering. This individual will work closely with management in a hands-on fashion to custom-develop the base code needed for our application.
Re-establishment of Business Contacts – Our sales manager will personally work to re-establish all of his previous business relationships in the industry, working to build both client and vendor relationships.
JTB Service associate selection and training – Service Associates will be from a production background, familiar with manufacturing and general machining; training will be ongoing for at least 1 year. Management will work with these individuals on a one-on-one basis to accomplish this, and minimize training costs while still completing orders as needed.
Selection of Sales Associates – JTB’s Industrial Sales division will be seeking bright, sales-oriented individuals to fulfill our internal needs for customer support, sales and marketing initiatives, and long-term goals.
Begin Catalog Program – Initially, we will order 250 sets of custom catalogs. We anticipate developing up to 1,200 catalog clients during the 4 years projected in the plan, with 300,000 to 400,000 industrial items available for resale.
Applications development begins – JTB application developer will begin development of our sales, marketing and engineering applications for integration with the corporations’ websites, as an aid for staff members to manage customer requests, engineering help, and exporting sales and engineering information about our products and services offering. When completed, these P.C.-based tools will interact with our Internet-based sites, and will become part of our applications offering of customer support products.
JTB Industrial Services Marketing Campaign – Our marketing campaign will initially target the local market with an initial letter to the key personnel within the target businesses. This introduction will be a combination letter marketing the JTB Industrial Sales Division as well; alternately, the Industrial Sales Divisions sales personnel will be following up on these accounts.
Marketing Sites are established – JTB will develop and manage multiple marketing sites dedicated to target market JTB’s entire line of industrial products and services. These sites will also generate revenue with additional product marketing from our channel partners.
Revenue Sites are established – JTB will develop and manage multiple industry specific sites dedicated to matching buyers with suppliers. These sites will be a pay-per-ad situation, allowing businesses to highlight their products and services. The JTB media groups logo will allow visitors to access our product and service sites. In some cases, JTB will be a vendor in these sites as well.
Distributorship Partnership Development Begins – JTB will implement its distributor partnership program to expand its client base throughout the U.S. Utilizing our custom-developed networking applications, we will be able to share inventory and access other partners’ inventory and services as well.
|Milestone||Start Date||End Date||Budget||Manager||Department|
|Secure Leasing and Banking Arrangements||2/1/2005||2/15/2005||$1,500||M.Jeremy||Management|
|Set up JTB’s operating facility||2/1/2005||3/1/2005||$6,500||M.Jeremy||Management|
|Equipment selections and installation||2/1/2005||6/15/2005||$125,000||M.Jeremy||P&S Div|
|Outsourced manufacturers selections||2/15/2005||3/15/2005||$3,500||M.Jeremy||P&S Div|
|Hire application developers||2/15/2005||3/15/2005||$3,500||M.Jeremy||IT Div|
|Selection of Sales Associates||2/15/2005||3/1/2006||$2,000||M.Jeremy||IS Div|
|Begin industrial services marketing campaign||3/1/2005||1/30/2006||$3,500||R.Jeremy||P&S Div|
|Re-establishment of business sources||3/1/2005||3/1/2006||$2,500||M.Jeremy||IS Division|
|Selection of Service Associates||3/10/2005||10/1/2005||$15,000||R.Jeremy||P&S Div|
|Revenue sites are established||4/14/2005||12/15/2006||$9,000||M.Jeremy||IT Div|
|Begin Applications Development||4/15/2005||8/15/2005||$12,000||M.Jeremy||IT Div|
|Marketing sites are established||4/15/2005||9/15/2005||$7,500||M.Jeremy||IT Div|
|Begin Sales and Catalog Campaign||4/15/2005||12/15/2006||$4,500||M.Jeremy||IS Division|
|Distributor Partnerships development begins||6/1/2005||5/30/2007||$5,000||M.Jeremy||IT Div|