Investment Website Business Plan

During FY2000, and after the introduction of the trading platform, Staryoo.com intends to advertise aggressively to build awareness of our brand quality, customer service, and depth and breadth of products and services. We intend to market our trading platform and services to individual investors by targeting traders through print, online, and other advertisements. Our strategy will be to position our website and services as a better way of handling securities transactions, accessing financial and market data, and strategizing on investments. Our advertising efforts are expected to include advertisements in financial publications and various other regional and national publications that have demographics similar to our target markets. We also intend to advertise and promote our platform through Internet website banner advertisements and television commercials. Using advertising agencies such as 24/7 Media, Inc. which have direct affiliations with a wide range of websites including China.com, may be a cost-effective method of achieving the broad range of impressions necessary to properly promote Staryoo.com

Our initial marketing efforts will be concentrated in China. However, as part of our long-term goals, we plan to market our services to trading communities interested in Chinese equities and securities in other member WTO nations.

5.1 Strategy Pyramid

Most Internet companies use a combination of marketing strategies for promoting their websites and for building brand name awareness. Staryoo.com has the additional advantage of the business relationships developed by Starmile in the financial industries. We feel that our target demographic is an investment-savvy male, affluent, and over the age of 25. Staryoo.com will use the following strategies in the promotion of this new website to the targeted demographic:

• Strategy 1 – Business Relationships – We feel that using existing relationships developed within the financial community will build site usage and recognition with the demographic most likely to be repeat users of our website and trading platform.
• Strategy 2 – Web-based Promotions – Using banner advertising on financial websites will increase brand awareness to a much wider audience, while still maintaining our target demographic. Specific websites to be researched include Sina.com, China.com, China.Internet.com, and China Business Weekly.
• Strategy 3 – Business Newspaper Advertising – Placing large ads in noted financial newspapers directing investors and businessmen to the Staryoo.com site will provide greater penetration into our targeted demographic.
• Strategy 4 – Brokerage Clients – Since we will be working with and not in competition with brokerages, direct marketing to brokerage’s clients will help promote Staryoo.com website awareness.
• Strategy 5 – Chinese American Citizens – Given the large population of Chinese living in America who wish to trade in the Chinese markets, placing advertisements in newspapers devoted to the Chinese in America should attract those requiring Staryoo.com to facilitate their trading.

5.2 Value Proposition

The value proposition offered by Staryoo.com is to give our members a website, which provides the most comprehensive array of financial products available in China for a very reasonable and competitive rate. We believe that the Staryoo.com site will provide our members with a convenient alternative for opening a brokerage account, bank transfers, and pager communications. Most important, Staryoo.com will offer 100% customer satisfaction guarantee for all products and services sold, thus building and retaining our member’s confidence.

5.3 Competitive Edge

Staryoo.com will follow a differentiation strategy to achieve a competitive advantage over other online trading providers in China. This differentiation will be based upon the features and services provided by the Staryoo.com site and include: real-time updates, pager alerts, bank transfers, chat rooms and forums, financial planning, education, etc. We will be quick to respond to our members needs, both for additional services/functionality on the website, and with traditional customer service. Staryoo.com will have both technological and marketing advantages over our competitors arising from the relationship Starmile has developed in the banking and financial industries.

5.4 Marketing Strategy

Staryoo.com has budgeted $100,000 per month for marketing and advertising, beginning in August, 2000. All advertising prior to the June 1, 2000 deployment date will be used to build individual investor anticipation for the site.

• Strategy 1 – Business Relationships – Budget $15,000 for collateral material to be distributed to banking and financial institutions. Note that $60,000 is budgeted for June, 2000 for initial creative and production costs. The remaining $30,000 will be used for re-runs and distribution through the course of the year. It is estimated that an initial distribution of $20,000 will be achieved through these institutions.
• Strategy 2 – Web-based Promotions – Budget $40,000 for banner/sidebar advertising on financial websites. Approximately $5,000 will be devoted to creative while the remaining $35,000 will be for ad placement. Given a CPM of approximately $25 (CBS MarketWatch rates), we can expect to have 1.4 million impressions per month. With a click-through rate of 0.8%, approximately 11,200 new prospective members will be attracted to the Staryoo.com site each month. We will be aggressively tracking click-through rates and membership conversion rates for each type and location of Web advertising done. Additionally, frequency will be capped at three so that impressions will not be lost on unattractable viewers.
• Strategy 3 – Business Newspaper Advertising – Budget $40,000 for advertising in financial and business newspapers. Approximately $5,000 will be devoted to creative while the remaining $35,000 will be for ad placement. Rates for the Business Weekly Newspaper are $5,000 per issue (xxx,xxx circulation). Our strategy will be to place ads consistently on a weekly basis so that our brand awareness is developed and identity remains consistent. This advertising strategy will also be used in America for Chinese Americans looking to trade the Chinese markets.
• Strategy 4 – Brokerage Clients – This will use similar collateral material as described in Strategy 1 above with the exception that it will be personalized for a particular brokerage’s clients. We will budget $5,000 per month for this strategy.

5.4.1 Pricing Strategy

Staryoo.com will focus on attracting customers with a competitive price structure and comprehensive services and functionality. Income will be generated from several sources:

1. Brokerage fees from click-throughs to Staryoo.com maintained VPN brokerage sites. Each brokerage will be implemented as a VPN maintained by Staryoo.com. Billing will occur similar to the Application Service Provider (ASP) model, where every time the VPN Brokerage site is accessed, the brokerage will be charged an access fee of $0.125 (1 RMB).
2. Fees charged to members for trading alerts.
3. Revenue generated from e-business. Commissions will be charged based upon products sold from various vendors.
4. Charge members a fee for various information, analysis, and services provided on a tiered system dependent upon content required. To build membership and usage, this revenue stream will not be implemented until 2002.
5. Advertisement and promotional fees. Staryoo.com will provide banner advertising to prospective clients wishing to reach a wide and affluent Internet audience.
6. The membership database represents tremendous value as a potential customer list. Interested companies wishing to target similar demographics will be charged for access to our membership list.

5.4.2 Promotion Strategy

Outlined below are some of the promotional strategies that will be initially implemented to drive membership:

• Discounted retail purchases.
• Discounted or free bank transfers for active traders.
• Discounted or free alerts for service sign-up.
• Free membership into the Staryoo Investors Club – our premium, value oriented membership club that provides discounts on retail items, commissions, and free trading tips and recommendations.
• Free choice of investment book for graduates of Staryoo University.com. Each graduate will receive an emailed certificate indicating that they have obtained a Bachelor of Staryoo in Investment Technology (B.S.I.T.) degree. Graduates will receive free membership into the Staryoo Investors Club.
• Guess the Hang Seng, Shanghai, and Shenzhen market indexes at the end of each week. Winners will receive commission rebates, computers, public recognition, etc.

5.5 Sales Strategy

We feel that sales will be directly proportional to the number of members using Staryoo.com. Starting with less than 1,000 active members in June 2000, our goal is to secure 18,000 members by December 2000, 80,000 members by December 2001 and 152,000 members by December 2002. The rapid membership escalation in 2002 will be realized with increased advertising and manpower. Important assumptions are highlighted below (see detailed revenue analysis for additional assumptions):

• Members access their VPN Brokerage site 30 times per month.
• Secure two brokerages per month.
• Actual brokerage online trading does not occur until three months after the initial sign-up of the brokerage due to the CSRC online trading application.
• Each brokerage has approximately 20,000 clients.
• Achieve 15% penetration of client base for VPN access, starting out with only 10%, increasing to 13% in 2001, and 15% in 2002.
• Pager Alerts are charged at $0.50 per transmission.
• Initially only 10% of members use the Alert feature.
• Premium membership fees do not occur until 2002.
• Each member spends $50 annually on retail purchases and Staryoo.com earns 20% on transactions.
• Direct Costs of Sales are estimated conservatively at 10% due to advertising creation, promotional discounts, and “Product Service Review” fees.

The annual sales projections are included below.

5.6 Strategic Alliances

Strategic alliances are crucial for the full realization of the revenue streams we anticipate. These alliances must be forged in two main areas: the banking industry and with financial brokers. We will pursue relationships with affinity partners to increase our access to potential customers, build brand name recognition, and expand the products and services we can offer our membership. Typical advertising expenses for Internet start-up companies to attract new customers and building name recognition range from 48% to 285% of revenue. We believe that our focus on affinity relationships will result in lower account acquisition costs for members and lower advertising expenses versus these other Internet-based businesses. We anticipate that we will build these alliances based upon the working relationships achieved through Starmile. Additionally, we will be developing e-commerce relationships with partners who will sell retail items on the website and looking to online data providers (i.e. Quote.com, etc.) for reciprocal agreements to share data and members through promotional programs. We intend to expand this affinity program and evaluate potential relationships with new affinity partners in the future as opportunities arise.

5.7 Milestones

Staryoo.com’s important milestones are shown in the following table. Row by row, they track the need to follow up on strategy with specific activities over the next 12 months. Most of the activities on the list can be easily linked to our strategic goals of obtaining greater membership and enhancing the functionality and features of our trading platform.