Strategy and Implementation Summary
Bottlieb Innovations will focus on professional customers who can benefit from the advantages offered by the Digital Geographer–accurate and timely area measurement. Customers will come from large corporations and small businesses alike.
Bottlieb’s marketing strategy assumes that production of the Digital Geographer will start in low volume and grow to a significant volume over time. Initially, Bottlieb will rely most heavily on word-of-mouth advertising and online promotion through the Internet. Any subsequent formal advertising budget will depend on the success of the product and the profitability of the company. The Digital Geographer’s unique capability is the product’s strongest selling point.
5.1 Competitive Edge
Bottlieb Innovations’ competitive edge is the superiority of its breakthrough product in applications requiring measurement of odd-shaped areas. The company expects to receive a patent on the Digital Geographer, which will clearly provide further competitive advantages.
5.2 Marketing Strategy
Bottlieb Innovations intends to seize market share of the existing measuring wheel market within the local San Diego area and its surrounding region in the first year of production. Bottlieb expects direct marketing and product reputation, as well as sales through major distributors and home improvement stores, to briskly expand market demand throughout the state, region, and nation within the next five years. Initial domestic success and favorable Web-based sales will determine whether Bottlieb Innovations will be able to focus on global expansion within this period. However, Web-based marketing, sales, and existing global distribution methods may very well allow Bottlieb to rapidly exploit global demand with production capacity as the only significant constraint within the initial five year period.
5.2.1 Positioning Statement
For professionals in the construction, contracting, and other industries who frequently need to accurately assess the area of land or buildings, the Digital Geographer offers simple operation and state-of-the-art technology which combine to offer huge time savings.
5.2.2 Pricing Strategy
Exact Digital Geographer pricing has not been determined, but it will significantly exceed that of current measuring wheels from existing manufacturers. The Digital Geographer is expected to retail in the $550 to $600 range. Bottlieb intends to hype the obvious cost saving benefits of the Digital Geographer. The Digital Geographer can realistically be promoted to be able to pay for itself within its first several uses.
5.2.3 Promotion Strategy
The management of Bottlieb Innovations is tasked with promoting its unique product through the most cost effective methods. The Digital Geographer is targeted at customers who currently use distance wheels for area calculation. Several evaluation versions of the Digital Geographer will be loaned out to construction companies, contractors, and real-estate appraisers in an attempt to generate interest for the product, and speed up adoption of the new technology.
Tool distributors and large tool retailers will be targeted as an efficient method of obtaining both sales and industry exposure. Presence and advertising at industry trade shows will also help to stimulate interest and demand for the Digital Geographer product. Finally, a company website will provide customers with information about the product, as well as the opportunity to buy the product over the Internet.
Several magazines, such as “Popular Science” have sections that describe innovative new products and services. Bottlieb Innovations expects to gain broad, inexpensive advertising and exposure by submitting the Digital Geographer to these magazines for review.
Since the product is new, generating a positive company image and good reputation within the industry is essential for quick growth. Establishing the product’s quality and reliability are both essential to forming the basis for a good reputation. If the initial production run of the Digital Geographer has any functional problems, then subsequent revisions, no matter how reliable they might be, will not be as well-received by the market. Management recognizes the need to “get it right the first time.” The benefits of the product will be readily obvious to the market, but reliability and reputation will be the determining factors in order to break any possible existing customer brand loyalties.
5.3 Sales Strategy
Within the first year of production, Bottlieb Innovations expects to establish several strong sales relationships with local or regional construction and surveying equipment distributors and several retail home improvement chains such as Home Base, Ace Hardware, etc.
Additionally, Bottlieb will rely on direct, face-to-face marketing and promotion of the Digital Geographer to local small and large construction companies and real estate agencies in order to promote superior product features and thus establish a core reputation on which to base further expansion. Online sales are expected to eventually exceed distributor and traditional retail sales.
5.3.1 Sales Forecast
Bottlieb Innovations’ sales forecast assumes constant, non-seasonal growth and an average revenue of $425 per unit. Since volume requirements will drive production, and our suppliers have substantial discounts associated with larger volumes, it is possible that we will lower the price of the Digital Geographer if the sales volume increases substantially. However, we will not allow the price decrease to cut into our profit margin.
It is difficult to know how many of our customers will pay in the neighborhood of $600 for a Digital Geographer, but we expect to ramp up to 100 units per month within the first year. If demand for the product turns out to be greater than expected, the facility in Escondido is capable of producing up to 500 units per month. The following table contains the annual sales forecast for FY2001 through FY2003.
|Year 1||Year 2||Year 3|
|Total Unit Sales||380||3,900||7,200|
|Unit Prices||Year 1||Year 2||Year 3|
|Direct Unit Costs||Year 1||Year 2||Year 3|
|Direct Cost of Sales|
|Subtotal Direct Cost of Sales||$100,500||$883,500||$1,320,000|