March 11, 2017 | Author: Palo Alto Software | Category: N/A
Download Internet Cafe Sample Marketing Plan...
JavaNet Internet Cafe - Sample Plan
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Copyright © Palo Alto Software, Inc., 1995-2007.
All rights reserved.
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____________________ Signature _____________________ Name (typed or printed) _______________ Date
This is a marketing plan. It does not imply an offering of securities.
Table of Contents Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
2.0
Situation Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Market Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.1 Market Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.2 Market Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.3 Market Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.4 Market Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 SWOT Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2.1 Strengths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2.2 Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2.3 Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2.4 Threats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 Service Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6 Critical Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7 Macroenvironment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1 1 2 3 3 4 5 5 6 6 6 7 7 7 8 8
3.0
Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Marketing Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Financial Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 Target Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 Positioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6 Strategy Pyramids . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7 Marketing Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7.1 Services and Service Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7.2 Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7.3 Promotion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7.4 Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8 Marketing Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8 9 9 9 9 10 10 11 11 11 11 12 12
4.0
Financials, Budgets, and Forecasts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Expense Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 Linking Sales and Expenses to Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 Contribution Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12 13 14 15 17 17
5.0
Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 Implementation Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Marketing Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 Contingency Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18 19 19 20
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21
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1.0
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
JavaNet Internet Cafe
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1.0 Executive Summary
mp
The goal of this marketing plan is to outline the strategies, tactics, and programs that will make the sales goals outlined in the JavaNet business plan a reality in the year 1999.
Sa
JavaNet, unlike a typical cafe, provides a unique forum for communication and entertainment through the medium of the Internet. JavaNet is the answer to an increasing demand. The public wants: (1) access to the methods of communication and volumes of information now available on the Internet, and (2) a place to socialize and share these experiences with friends and colleagues.
Our target markets include:
Pro
Marketing will play a vital role in the success of JavaNet. JavaNet must build a brand around the services it offers by heavily promoting itself through local television, radio, and print advertising. Marketing efforts are just beginning by the time a potential customer enters JavaNet for the first time. A strong emphasis will be put on keeping customers and building brand loyalty through programs focused on staffing, experience, and customer satisfaction.
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• Students from nearby housing centers. • Business people from the downtown business centers and professional buildings. • Seniors from nearby retirement facilities.
2.0 Situation Analysis
gP
JavaNet just opened its doors for business a little over a month ago. Business is good, and customers have been impressed with our offerings, but we need to focus our efforts on implementing the strategies, programs, and tactics outlined in the original business plan. Differentiating ourselves from other more traditional cafes has given us the ability to effectively compete on the beverage and pastry side of the business with the already entrenched competition. Sales are brisk and in-line with projections.
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The Internet services side of the business is rapidly being accepted by the local community. Memberships are meeting the projections outlined in the business plan, and sales of Internet services are meeting the goals forecast. Students love to gather for late-night sessions, nearby seniors are getting a glimpse of what the Internet offers, and local business people love to stop by for a quick bite and an email check.
2.1 Market Summary
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JavaNet is faced with the exciting opportunity of being the first-mover in the local cyber-cafe market. The consistent popularity of coffee, combined with the growing interest in the Internet, has been proven to be a winning concept in other markets and will produce the same results here. All three target markets for the JavaNet service are growing at a relatively fast pace. We're faced with a large number of potential customers, and we're offering a needed service. Target Market Growth: • University students continue to grow at a steady pace, at nearly 4%
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
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JavaNet Internet Cafe
Office Workers Seniors
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2.1.1 Market Demographics
University Students
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Target Markets
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• Office workers in the downtown area and nearby professional buildings continue to add value, growing at 3% • Seniors are becoming an important part of downtown business, growing at almost 6% • Teens continue to play a major role in downtown foot-traffic, growing at 2%
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JavaNet's customers can be divided into two groups. The first group is familiar with the Internet and desires a progressive and inviting atmosphere where they can get out of their offices or homes to enjoy a great cup of coffee and Internet access. This group is made up of students from the University of Oregon and business people from nearby downtown offices and professional centers.
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The second group is not as familiar with the Internet. This group is made up of seniors from the downtown retirement centers. There are three large retirement centers in the downtown area, and currently none of them offer Internet access to their residents. Seniors represent a growing segment of Internet users. They use the Internet to communicate with friends and family and they will be regular users of the JavaNet service. Table: Market Analysis Market Analysis
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Potential Customers University Students Office Workers Seniors Total
Growth 4% 3% 6% 3.59%
2001
2002
2003
2004
2005
10,000 20,000 3,000 33,000
10,400 20,600 3,180 34,180
10,816 21,218 3,371 35,405
11,249 21,855 3,573 36,677
11,699 22,511 3,787 37,997
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
CAGR 4.00% 3.00% 6.00% 3.59%
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2.1.2 Market Needs
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Factors, such as addiction, and historical sales data ensure that the high demand for coffee will remain constant over the next five years.
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The rapid growth of the Internet and online services that has been witnessed worldwide is only the beginning of a long-lived trend towards an economy built on the infrastructure of the Internet. The potential growth of the Internet is enormous, to the point where one day, a computer terminal with an online connection will be as common and necessary as a telephone or toilet. This may be 5 or 10 years down the road, but for the next five years, the online service provider market is sure to experience tremendous growth. Establishing itself as the first cyber-cafe in the area, JavaNet will enjoy the first-mover advantages of name recognition and customer loyalty. Initially, JavaNet will hold a 100 percent share of the cyber-cafe market locally. In the next five years, competitors will enter the market. JavaNet has set a goal to consistently maintain a market share of greater than fifty percent.
2.1.3 Market Trends
JavaNet will provide:
A meeting place for business people interested in sharing their Internet-based business ideas. • A social hub for students and young people interested in sharing a beverage and their Internet experiences with friends. • A place for nearby seniors to gather and learn about the powers of the Internet and better communication methods. • A stopping point for travelers in need of an Internet connection.
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The Internet has become a point of conversation in almost all social groups. People are talking about sites they visited, business people are talking about Internet-based businesses, and kids are talking about the latest Internet clubs and chat rooms. People like to communicate their Internet experiences with their friends, colleagues, and family. However, it can be difficult to do it in front of a computer terminal at the office or in the family study. A comfortable place to gather and share these experiences is becoming a real need.
A market survey was conducted in the Fall of 1998. Key questions were asked of fifty potential customers. Some key findings include:
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• 35 subjects said they would be willing to pay for access to the Internet. • $2.50 an hour was the most popular hourly Internet fee. • 24 subjects use the Internet to communicate with others on a regular basis.
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
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JavaNet Internet Cafe
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Market Forecast 25,000
20,000
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15,000
5,000
0 2002
2003
Seniors
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2005
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2001
Office Workers
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10,000
University Students
2.1.4 Market Growth
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The market for the services JavaNet will offer is growing rapidly. The cyber-cafe hasn't come to this area yet, but similar services are growing rapidly on a global scale. Large cities that cater to large numbers of travelling business people and tourists have been saturated with businesses offering the services JavaNet will offer. Business people use the Internet services to catch up on email and communications with their family, and tourists do the same. Our area supports a population that has many of the same needs and interests of this larger group.
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The student population continues to grow as the University grows in popularity with highschool graduates from out of state. These students tend to have money and an interest in upscale social centers. Business in the downtown area is on the rise with the coming completion of the renovated Fifth Street Market and the new Compu-tech facility. JavaNet will target these groups with radio and TV spots on local stations.
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
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Target Market Growth
6.00% 5.00%
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4.00% 3.00%
1.00% 0.00%
Office Workers
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University Students
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2.00%
2.2 SWOT Analysis
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The SWOT analysis provides us with an opportunity to examine the internal strengths and weaknesses JavaNet must address. It also allows us to examine the opportunities presented to JavaNet as well as potential threats.
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JavaNet has a valuable inventory of strengths that will help it succeed. These strengths include: a knowledgeable and friendly staff, state-of-the-art computer hardware, and a clear vision of the market need. Strengths are valuable, but it is also important to realize the weaknesses JavaNet must address. These weaknesses include: a dependence on quickly changing technology, and the cost factor associated with keeping state-of-the art computer hardware.
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JavaNet's strengths will help it capitalize on emerging opportunities. These opportunities include, but are not limited to, a growing population of daily Internet users, and the growing social bonds fostered by the new Internet communities. Threats that JavaNet should be aware of include, the rapidly falling cost of Internet access, and emerging local competitors.
2.2.1 Strengths
Knowledgeable and friendly staff. We've gone to great lengths at JavaNet to find people with a passion for teaching and sharing their Internet experiences. Our staff is both knowledgeable and eager to please. State-of-the art equipment. Part of the JavaNet experience includes access to stateof-the-art computer equipment. Our customers enjoy beautiful flat-screen displays, fast machines, and high-quality printers. Up-scale ambiance. When you walk into JavaNet, you'll feel the technology. High backed mahogany booths with flat-screen monitors inset into the walls provide a cozy hideaway for meetings and small friendly gatherings. Large round tables with displays
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Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
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JavaNet Internet Cafe
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viewable from above provide a forum for larger gatherings and friendly "how-to" classes on the Internet. Aluminum track lighting and art from local artists sets the mood. Last, but not least, quality cappuccino machines and a glass pastry display case provide enticing refreshments. Clear vision of the market need. JavaNet knows what it takes to build an upscale cyber cafe. We know the customers, we know the technology, and we know how to build the service that will bring the two together.
2.
A dependence on quickly changing technology. JavaNet is a place for people to experience the technology of the Internet. The technology that is the Internet changes rapidly. Product lifecycles are measured in weeks, not months. JavaNet needs to keep up with the technology because a lot of the JavaNet experience is technology. Cost factor associated with keeping state-of-the-art hardware. Keeping up with the technology of the Internet is an expensive undertaking. JavaNet needs to balance technology needs with the other needs of the business. One aspect of the business can't be sacrificed for the other.
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2.2.2 Weaknesses
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Growing population of daily Internet users. The importance of the Internet almost equals that of the telephone. As the population of daily Internet users increases, so will the need for the services JavaNet offers. Social bonds fostered by the new Internet communities. The Internet is bringing people from across the world together unlike any other communication medium. JavaNet will capitalize on this social trend by providing a place for smaller and local Internet communities to meet in person. JavaNet will grow some of these communities on its own by establishing chat areas and community programs. These programs will be designed to build customer loyalty.
2.2.4 Threats
Rapidly falling cost of Internet access. The cost of access to the Internet for home users is dropping rapidly. Internet access may become so cheap and affordable that nobody will be willing to pay for access to it. JavaNet is aware of this threat and will closely monitor pricing. Emerging local competitors. Currently, JavaNet is enjoying a first-mover advantage in the local cyber-cafe market. However, additional competitors are on the horizon, and we need to be prepared for their entry into the market. Many of our programs will be designed to build customer loyalty, and it is our hope that our quality service and upscale ambiance won't be easily duplicated.
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2.2.3 Opportunities
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Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
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JavaNet Internet Cafe
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2.3 Competition
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The dual product/service nature of JavaNet's business faces competition on two levels. JavaNet competes not only with coffee retailers, but also with Internet service providers. The good news is that JavaNet does not currently face any direct competition from other cyber cafes in the local market. There are a total of three cyber cafes in the state: one located in Portland and two in Ashland.
Pro
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Heavy competition between coffee retailers creates an industry where all firms face the same costs. There is a positive relationship between price and quality of coffee. Some coffees retail at $8/pound, while other more exotic beans may sell for as high as $16/pound. Wholesalers sell beans to retailers at an average of a 50% discount. For example, a pound of Sumatran beans wholesales for $6.95 and retails for $13.95. And as in most industries, price decreases as volume increases.
2.4 Service Offering
JavaNet will provide its customers with full access to the Internet and common computer programs and equipment. Some of the Internet and computing services available to JavaNet customers are listed below:
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• Access to external POP3 email accounts. • Customers can sign up for a JavaNet email account. This account will be managed by JavaNet servers and accessible from computer systems outside the JavaNet network. • FTP, Telnet, Gopher, and other popular Internet utilities will be available. • Access to Netscape or Internet Explorer browsers. • Access to laser and color printing. • Access to popular software applications, like Adobe Photoshop and Microsoft Word.
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JavaNet will also provide its customers with access to introductory Internet and email classes. These classes will be held in the afternoon and late in the evening. By providing these classes, JavaNet will build a client base familiar with its services. The computers, Internet access, and classes wouldn't mean half as much if taken out of the environment JavaNet will provide. Good coffee, specialty drinks, bakery goods, and a comfortable environment will provide JavaNet customers with a home away from home; a place to enjoy the benefits of computing in a comfortable and well kept environment.
2.5 Keys to Success
The keys to the success for JavaNet are:
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• The creation of a unique, innovative, upscale atmosphere that will differentiate JavaNet from other local coffee shops and future Internet cafes. • The establishment of JavaNet as a community hub for socialization and entertainment. • The creation of an environment that won't intimidate the novice user. JavaNet will position itself as an educational resource for individuals wishing to learn about the benefits the Internet has to offer. • Great coffee and bakery items.
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
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JavaNet Internet Cafe
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2.6 Critical Issues The risks involved for JavaNet are:
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Will there be a continuing demand for the services offered by JavaNet? Will the popularity of the Internet continue to grow, or is the Internet a fad? Will individuals be willing to pay for the services JavaNet offers? Will the cost of accessing the Internet from home drop so significantly that there will not be a market for Internet Cafes such as JavaNet?
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• • • •
2.7 Macroenvironment
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The retail coffee industry in this area experienced rapid growth at the beginning of the decade and is now moving into the mature stage of its life cycle. Many factors contribute to the large demand for good coffee: The student population at the University is a main source of demand for coffee retailers, the cold and damp climate is extremely conducive to coffee consumption, and current trends in the Northwest reflect the popularity of quality coffee and specialty drinks.
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3.0 Marketing Strategy
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The popularity of the Internet is growing exponentially. Those who are familiar with the information superhighway are well aware of how fun and addicting surfing the Internet can be. Those who have not yet experienced the Internet need a convenient, relaxed atmosphere where they can feel comfortable learning about and utilizing the current technologies. JavaNet seeks to provide its customers with affordable Internet access in an innovative and supportive environment.
JavaNet has three main strategies. The first strategy focuses on attracting novice Internet users. By providing a novice-friendly environment, JavaNet hopes to educate and train a loyal customer base.
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The second and most important strategy focuses on pulling in power Internet users. Power Internet users are extremely familiar with the Internet and its offerings. This group of customers serves an important function at JavaNet. Power users have knowledge and webbrowsing experience that novice Internet users find attractive and exciting.
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The third strategy focuses on building a social environment for JavaNet customers. A social environment that provides entertainment will serve to attract customers that wouldn't normally think about using the Internet. Once on location at JavaNet, these customers that came for the more standard entertainment offerings, will realize the potential entertainment value the Internet can provide.
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
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3.1 Mission JavaNet has one purpose.
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JavaNet provides communities with the ability to access the Internet, enjoy a cup of coffee, and share Internet experiences in a comfortable environment.
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JavaNet's marketing will consistently build on this mission. Everything we do, from the pricing structure for our services to the ambiance we create, must be done with this mission in mind. We cater to: downtown business people, traveling business people, university students, and seniors. Our ambiance and our services are designed for this clientele and our marketing efforts are focused on capturing this market.
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3.2 Marketing Objectives
JavaNet's marketing objectives for the first three years of operation include:
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3.3 Financial Objectives
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• Grow total sales by 10% annually. • Diversify the service offering to insulate the business against fluctuations in any one component of the revenue stream. • Build customer loyalty through educational programs. • Maintain a staff of enthusiastic employees excited to share their Internet knowledge with JavaNet customers. • Build the JavaNet brand to the point where it becomes a household word in the area.
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The goal of this marketing plan is to outline the marketing strategies, tactics, and programs that will make the vision outlined in the JavaNet business plan a reality in the year 2000. The vision outlined in the business plan includes sales of roughly $275,000 in the first year with that figure increasing 10% annually.
3.4 Target Marketing
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JavaNet intends to cater both to people who want a guided tour of the Internet and to experienced users eager to indulge their passion for computers in a social setting. Furthermore, JavaNet will be a magnet for local and traveling professionals who desire to work or check their email messages in a friendly atmosphere. These professionals will either use JavaNet's PCs, or plug their own notebook computers into Internet connections. JavaNet's target market covers a wide range of ages: from members of "Generation X," who grew up surrounded by computers, to seniors from local retirement centers. Our primary target markets include: • Students. The large student population will become an important part of the JavaNet customer base. The student population continues to grow with the success of the University. Evening entertainment, access to the Internet, and the up-scale ambiance will attract this demographic. • Business people. The downtown business community is growing rapidly with the
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
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JavaNet Internet Cafe
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addition of a new Compu-tech building and a flurry of new professional centers. JavaNet will provide a perfect setting for business meetings. It will also give traveling business people an opportunity to plug their laptops into the JavaNet network to check email communications. • Seniors. Represent a growing population of Internet users. JavaNet will target the seniors in the nearby downtown retirement centers by offering "Introduction to the Internet" classes. The JavaNet staff will hold brief classes in the off hours to educate seniors on how to use the Internet to communicate with friends and family. This will build a regular base of customers that wouldn't typically use the services offered by JavaNet.
3.5 Positioning
3.6 Strategy Pyramids
lan
Pro
JavaNet will position itself as an upscale coffee house and Internet service provider. Business people of all types will use JavaNet as a place to hold meetings and catch-up on email communications. Students from nearby downtown housing centers will use JavaNet as a place to socialize and discuss the latest Internet sites. Seniors from downtown retirement centers will experience the Internet for the first time at JavaNet. Programs designed to teach newcomers about the power of the Internet will help build customer loyalty and spread the word about the services JavaNet offers.
The following are the three key strategies JavaNet will focus on:
gP
JavaNet's first strategy focuses on attracting novice Internet users. JavaNet plans on attracting these customers by:
tin
• Providing a novice-friendly environment. JavaNet will be staffed by knowledgeable employees focused on serving the customer's needs. • A Customer Service desk will always be staffed. If a customer has any type of question or concern, a JavaNet employee will always be available to assist. • JavaNet will offer introductory classes on the Internet and email. These classes will be designed to help novice users familiarize themselves with these key tools and the JavaNet computer systems.
rke
JavaNet's second strategy will be focused on attracting power Internet users who will provide an important function at JavaNet. JavaNet plans on attracting this type of customer by: • Providing the latest in computing technology. • Providing scanning and printing services. • Providing access to powerful software applications.
Ma
The third strategy focuses on building a social environment for JavaNet customers. A social environment that provides entertainment will serve to attract customers that wouldn't normally think about using the Internet. Once on location at JavaNet, these customers that came for the more standard entertainment offerings will realize the potential entertainment value the Internet can provide.
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
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3.7 Marketing Mix
mp
JavaNet's marketing efforts will focus on building a loyal base of customers that will use the services provided on an almost daily basis.
3.7.1 Services and Service Marketing
Pro
Sa
As the popularity of the Internet continues to grow at an exponential rate, easy and affordable access to the information superhighway is quickly becoming a necessity of life. JavaNet provides the local community with the ability to access the Internet, enjoy a cup of coffee, and share Internet experiences in a comfortable environment. People of all ages and backgrounds will come to enjoy the unique, upscale, educational, and innovative environment that JavaNet provides.
3.7.2 Pricing
lan
JavaNet bases its prices for coffee and specialty drinks on the "Retail Profit Analysis" provided by our supplier, Allann Brothers Coffee Co., Inc. Allann Brothers has been in the coffee business for 22 years and has developed a solid pricing strategy.
tin
gP
Determining a fair market, hourly price for online use is more difficult because there is no direct competition from another cyber-cafe in our area. Therefore, JavaNet considered three sources to determine the hourly charge rate. First, we considered the cost to use other Internet servers, whether it is a local networking firm or a provider such as America Online. Internet access providers use different pricing schemes. Some charge a monthly fee, while others charge an hourly fee. In addition, some providers use a strategy with a combination of both pricing schemes. Thus, it can quickly become a high monthly cost for the individual. Second, JavaNet looked at how cyber-cafes in other markets such as Portland and Ashland went about pricing Internet access. Third, JavaNet used the market survey conducted in the Fall of 1998. Evaluating these three factors resulted in JavaNet's hourly price of $2.50.
3.7.3 Promotion
rke
JavaNet will spend almost fifty thousand dollars in its first year of operations to build a brand and a loyal customer base. Marketing efforts will be focused on the local market, and the campaign will run the entirety of 1999, increasing roughly 10% per year to match increased sales revenue. The marketing budget will consistently equal almost 20% of sales. A Few Specific Marketing Efforts: Local TV spots Print Materials Local Newspapers Local Radio Spots JavaNet Events
Ma
• • • • •
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3.7.4 Service
Dedicated to Quality Service Programs:
mp
This topic is a critical reminder of the fact that JavaNet is a service business. The success of our business depends upon the quality of the service we offer and delivering that service consistently. JavaNet is dedicated to delivering this quality service.
Pro
Sa
• We've gone to great lengths at JavaNet to find people with a passion for teaching and sharing their Internet experiences. Our staff is both knowledgeable and eager to please. An excess of staff members will consistently be on hand to provide service to JavaNet customers. Performance will be frequently evaluated both internally and through customer surveys. • A highly valued member of the JavaNet staff will be the "Customer Happiness Representative." This individual will be available forty hours a week to monitor the level of happiness amongst JavaNet customers. This individual will be responsible for: developing customer satisfaction programs, monitoring happiness levels, responding to customer concerns, and the general well being of every JavaNet customer.
3.8 Marketing Research
gP
lan
In 1998, a market survey was conducted to help evaluate the business viability prior to its inception. The survey was a valuable resource for establishing pricing and market needs. We will continue to conduct a survey of our customers and potential customers on an annual basis. Survey results will be used to create new marketing programs and monitor the performance of current marketing programs.
4.0 Financials, Budgets, and Forecasts
The marketing plan is built on these truths:
rke
2. 3. 4.
The marketing budget is based on a percentage of sales value. Currently, that value is set at 20%. Building a strong brand and brand loyalty is critical to the success of JavaNet. Marketing is a critical component of the JavaNet business plan. The relationship between marketing dollars spent and revenues generated is positive only to a certain point. We don't feel that a marketing budget based on 20% of sales is close to that point where additional marketing dollars spent won't create additional revenue. If we can manage, we plan to spend more than 20% of sales on marketing in future years. However, we want to keep this relationship in mind as we consider spending more on marketing efforts. Our understanding of the need for strong branding and emphasis on marketing gives us a competitive edge over other cafes in our area and potential competitors.
tin
1.
Ma
5.
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
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4.1 Break-even Analysis
mp
JavaNet is operating in an industry capable of supporting high gross margins. Variable costs in relationship to per-unit revenues are low. Variable costs are equal to roughly 25% of per-units revenues. It is our hope that as we move into the future and continue to build relationships with our suppliers, this value will decrease further, approaching a value of 20%.
Sa
Fixed costs for JavaNet equal almost $7,500. Fixed costs include: payment of debt, facility lease costs, hardware costs, and other costs JavaNet must maintain on a monthly basis. These costs are fixed and aren't impacted by an increase or a decrease in sales. Currently, JavaNet will break even at a monthly sales point of $10,000.
Pro
Break-even Analysis $8,000 $6,000 $4,000 $2,000
($4,000) ($6,000) ($8,000) 0
lan
$0 ($2,000)
1000
2000
3000
4000
5000
gP
Monthly break-even point
tin
Break-even point = where line intersects with 0
Table: Break-even Analysis Break-even Analysis
rke
Monthly Units Break-even Monthly Revenue Break-even
$3.35 $0.84 $7,500
Ma
Assumptions: Average Per-Unit Revenue Average Per-Unit Variable Cost Estimated Monthly Fixed Cost
2,986 $10,002
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4.2 Sales Forecast
Sa
mp
Revenues for the first year of operation are based on an almost 10% growth rate from month to month. This is an aggressive estimate, but we feel that our strong emphasis on marketing will have positive results. Annually, beyond the first year of operations, we're predicting a growth rate of roughly 10%. We'll have a better idea of potential growth rate beyond year one as we make our way through our first year. The plan will be updated as we receive more information.
Sales Monthly
Pro
$50,000 $40,000
Coffee (based on average) Specialty Drinks (based on average)
$30,000
E-mail Memberships
$20,000
Hourly Internet Fees Baked Goods (based on average)
lan
$10,000
Ma
rke
tin
gP
$0
Other
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
Page 14
JavaNet Internet Cafe
Sales Forecast 2002
2003
16,230 9,129 12,173 60,255 54,777 0 152,564
17,853 10,042 13,390 66,280 60,255 0 167,820
19,639 11,047 14,729 72,908 66,280 0 184,602
Unit Prices Coffee (based on average) Specialty Drinks (based on average) E-mail Memberships Hourly Internet Fees Baked Goods (based on average) Other
2001 $1.00 $2.00 $10.00 $2.50 $1.25 $0.00
2002 $1.00 $2.00 $10.00 $2.50 $1.25 $0.00
Sales Coffee (based on average) Specialty Drinks (based on average) E-mail Memberships Hourly Internet Fees Baked Goods (based on average) Other Total Sales
$16,230 $18,259 $121,726 $150,636 $68,471 $0 $375,323
tin
Direct Cost of Sales Coffee (based on average) Specialty Drinks (based on average) E-mail Memberships Hourly Internet Fees Baked Goods (based on average) Other Subtotal Direct Cost of Sales
21,602 12,151 16,202 80,199 72,908 0 203,062
23,763 13,366 17,822 88,219 80,199 0 223,368
Sa 2003 $1.00 $2.00 $10.00 $2.50 $1.25 $0.00
2005 $1.00 $2.00 $10.00 $2.50 $1.25 $0.00
$19,639 $22,093 $147,289 $182,270 $82,850 $0 $454,141
$21,602 $24,303 $162,018 $200,497 $91,135 $0 $499,555
$23,763 $26,733 $178,219 $220,547 $100,248 $0 $549,510
2002 $0.50 $2.50 $0.63 $0.31 $0.00 $0.25
2003 $0.50 $2.50 $0.63 $0.31 $0.00 $0.25
2004 $0.50 $2.50 $0.63 $0.31 $0.00 $0.25
2005 $0.50 $2.50 $0.63 $0.31 $0.00 $0.25
$8,927 $25,106 $8,436 $20,547 $0 $0 $63,015
$9,819 $27,617 $9,279 $22,601 $0 $0 $69,317
$10,801 $30,378 $10,207 $24,862 $0 $0 $76,248
$11,881 $33,416 $11,228 $27,348 $0 $0 $83,873
Pro
$8,115 $22,824 $7,669 $18,679 $0 $0 $57,286
2005
2004 $1.00 $2.00 $10.00 $2.50 $1.25 $0.00
$17,853 $20,085 $133,899 $165,700 $75,318 $0 $412,855
lan 2001 $0.50 $2.50 $0.63 $0.31 $0.00 $0.00
gP
Direct Unit Costs Coffee (based on average) Specialty Drinks (based on average) E-mail Memberships Hourly Internet Fees Baked Goods (based on average) Other
2004
mp
2001 Unit Sales Coffee (based on average) Specialty Drinks (based on average) E-mail Memberships Hourly Internet Fees Baked Goods (based on average) Other Total Unit Sales
le
Table: Sales Forecast
4.3 Expense Forecast
rke
The marketing budget will consistently equal approximately 20% of sales. One of our strongest strengths is our marketing and brand building capabilities, and the aggressive marketing budget is a reflection of the importance we attribute to our marketing activities.
Ma
Currently, the marketing budget beyond year one remains set at 20% of sales. It is our hope to increase this budget should sales and efficiencies of scale allow us to do so. Explanation of Major Marketing Expenses: • Local TV spots... In our first year of operations, we will spend $23,000 on TV spots. TV spots allow us to reach a large audience and effectively target our market. • Print Materials... Print materials always require a significant budget. They include: flyers, literature distributed internally, novelties for customers, coupons, and anything else we can squeeze into this budget. • Local Newspapers... An important part of our marketing efforts. Newspapers ads will
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
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JavaNet Internet Cafe
Sa
mp
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give us a vehicle for consistently getting our message/brand in front of a large number of potential customers. We believe this vehicle will get our message to seniors, which make up a large portion of our target market. In addition, the business section will provide us with a means for communicating with our business customers. • Local Radio Spots... These are an inexpensive way to secure a large number of daily impressions. • JavaNet Events... This will include local radio and TV events where radio and TV stations broadcast from the JavaNet site offering freebies to first-time customers for stopping by. JavaNet will also run educational programs and community events throughout the year. • Customer Happiness Representative... This employee will monitor the level of happiness amongst JavaNet customers. They will be responsible for: developing customer satisfaction programs, monitoring happiness levels, responding to customer concerns, and the general well being of every JavaNet customer.
Pro
Monthly Expense Budget $5,000 $4,500 $4,000
lan
$3,500 $3,000 $2,500 $2,000
$1,000 $500 $0
gP
$1,500
tin
Jan Feb Mar Apr May Jun
Local TV Spots Print Materials Other
Jul Aug Sep Oct Nov Dec
Table: Marketing Expense Budget
rke
Marketing Expense Budget Local TV Spots Print Materials Other
2002 $25,300 $7,425 $3,630 -----------$36,355 8.81%
2003 $27,830 $8,168 $3,993 -----------$39,991 8.81%
2004 $30,613 $8,984 $4,392 -----------$43,990 8.81%
2005 $33,674 $9,883 $4,832 -----------$48,389 8.81%
Ma
Total Sales and Marketing Expenses Percent of Sales
2001 $23,000 $6,750 $3,300 -----------$33,050 8.81%
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
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4.4 Linking Sales and Expenses to Strategy
Sa
mp
Our marketing expenses are tied directly to our sales revenue. As sales increase, the marketing expenses will increase. Currently our marketing expenses equal roughly 20% of sales, and we hope to increase that value in the future. Our programs will be monitored for efficiency and return on investment. Most notably, we want to pay close attention to the value of the "Customer Happiness Representative." This component of our marketing budget is expensive, and we want to track the value of the program to make sure we're optimizing our budget. Periodically, we will survey our customers to determine the effectiveness of our programs, and we'll adjust the marketing mix appropriately based on our findings.
Sales vs. Expenses Monthly
Pro
$50,000 $45,000 $40,000 $35,000 $30,000
lan
$25,000 $20,000 $15,000 $10,000
$0
gP
$5,000
Jan Feb Mar Apr May Jun
Sales Expenses
Jul Aug Sep Oct Nov Dec
tin
4.5 Contribution Margin
The Contribution Margin chart and table presents a strong outlook for JavaNet's first year of operations. Sales increase an average of 10% per month in the first year. Contribution margin runs at roughly 50%. The marketing budget is consistently based on 20% of total revenue. A strong focus on local TV and radio is apparent in the expense breakdown. The marketing budget is spread evenly throughout the year.
Ma
rke
1. 2. 3. 4. 5.
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Page 17
mp
Contribution Margin Monthly $40,000 $35,000 $30,000
Sa
$25,000 $20,000 $15,000
Pro
$10,000 $5,000 $0
Contribution Margin
Jul Aug Sep Oct Nov Dec
lan
Jan Feb Mar Apr May Jun
Table: Contribution Margin
le
JavaNet Internet Cafe
2001 $375,323 $57,286 $3,000 -----------$60,286
2002 $412,855 $63,015 $3,000 -----------$66,015
2003 $454,141 $69,317 $3,000 -----------$72,317
2004 $499,555 $76,248 $3,000 -----------$79,248
2005 $549,510 $83,873 $3,000 -----------$86,873
$315,036 83.94%
$346,840 84.01%
$381,824 84.08%
$420,306 84.14%
$462,637 84.19%
Total Sales and Marketing Expenses Percent of Sales
2001 $23,000 $6,750 $3,300 -----------$33,050 8.81%
2002 $25,300 $7,425 $3,630 -----------$36,355 8.81%
2003 $27,830 $8,168 $3,993 -----------$39,991 8.81%
2004 $30,613 $8,984 $4,392 -----------$43,990 8.81%
2005 $33,674 $9,883 $4,832 -----------$48,389 8.81%
Contribution Margin Contribution Margin / Sales
$281,986 75.13%
$310,485 75.20%
$341,833 75.27%
$376,317 75.33%
$414,249 75.39%
Total Cost of Sales Gross Margin Gross Margin %
gP
Sales Direct Cost of Sales Other Variable Costs of Sales
rke
tin
Marketing Expense Budget Local TV Spots Print Materials Other
5.0 Controls
Ma
The goal of this marketing plan is to outline the strategies, tactics, and programs that will make the sales goals outlined in the JavaNet business plan a reality in the year 2000. We have these marketing obstacles to face: • The creation of a unique, innovative, upscale atmosphere that will differentiate JavaNet from other local coffee shops and future Internet cafes. • The establishment of JavaNet as a community hub for socialization and entertainment. • The creation of an environment that won't intimidate the novice user. JavaNet will position itself as an educational resource for individuals wishing to learn about the benefits the Internet has to offer.
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JavaNet Internet Cafe
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Our marketing efforts will be focused on building the image outlined above. We have milestones and sales goals to meet and a business plan outlining our first and second year of business in detail. It will be critical to use this marketing plan and the JavaNet business plan as living/working documents. We can't allow them to sit in a file. They must be used as a map for the future success of JavaNet.
Sa
5.1 Implementation Milestones
Pro
The milestones chart below outlines key dates that the marketing team must meet. The milestones table includes both sales goals and deadlines for major projects that impact the programs outlined in the Marketing Expense Budget. Each milestone is assigned a manager and that manager has ownership of the task and is responsible for its success. We will track our successes and failures by reviewing planned-vs-actual results. Successes and failures will be reviewed and addressed and a quarterly basis. Table: Milestones Milestones
Start Date 1/15/1999 1/15/1999 2/1/1999 1/1/1999
End Date 2/1/1999 2/1/1999 2/10/1999 1/5/1999
Budget $500 $250 $250 $75
Manager Cale Cale Cale Cale
Department
Start Date
End Date
$1,075 Budget
Manager
Department
1/15/1999
2/1/1999
$500
Cale
Start Date 2/1/1999 4/1/1999
End Date 2/10/1999 4/10/1999
$500 Budget $250 $300
Manager Cale Cale
Department
Start Date 1/15/1999
End Date 1/16/1999
$550 Budget $250
Manager Cale
Department
Start Date 3/1/1999
End Date 4/1/1999
$250 Budget $1,000
Manager Cale
Department
rke
tin
gP
lan
Advertising TV Ad Creative Radio Spot 1 Creative Radio Spot 2 Creative Newspaper Ad Creative Other Total Advertising Budget PR Customer Happiness Representative Prog. 1 Other Total PR Budget Direct Marketing JavaNet Event 1 Creative JavaNet Event 2 Creative Other Total Direct Marketing Budget Web Development Introduction to the Internet Class 1 Other Total Web Development Budget Other Customer Survey Other Total Other Budget Totals
$1,000 $3,375
5.2 Marketing Organization
Ma
The founder of JavaNet, Cale Brockman, has a BS from the University of Oregon in Marketing and Management and will head the marketing effort. Initially, there will only be one additional member of the marketing team, the "Customer Happiness Representative." This position has not yet been filled, but it is the first milestone that must be completed. The "Customer Happiness Representative" will play a large role in implementing the different marketing programs. A marketing manager will be hired during the third or fourth quarter if revenues meet projections.
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5.3 Contingency Planning
The following are some possible scenarios:
mp
This marketing plan is just that, a plan. Plans don't always work out and we have to be ready to deal with the likelihood that JavaNet won't make good on the projections outlined in this plan. We also have to prepare ourselves for overwhelming success.
Sa
Revenues exceed projections - A serious increase in revenues over projections will give us an opportunity to increase our marketing budget above the allocated 20%. We'll be able to hire the marketing manager earlier, and we'll be able to provide more equipment and possibly add an additional location.
Pro
Revenues miss projections - We have to be prepared for this possibility. If we miss our projections, we simply have to re-double our marketing efforts. The danger in this scenario is that the first reaction to missed projections is to decrease spending, particularly marketing expenses. We can't do that! We have to get our message out to the target market, and we can't do that if we stop spending on marketing. Additional capital infusions may become necessary and that possibility is detailed in the business plan.
Ma
rke
tin
gP
lan
Internet side of business plays a lesser role - Our customers might not be willing to pay for Internet access or JavaNet memberships as Internet access costs and hardware costs continue to fall. If this scenario materializes, we will need to move our focus to beverages and pastry items, perhaps even providing deli-style lunches. Internet services in the scenario would still play an important role in attracting customers; we'd just have to charge less and move our numbers around to accommodate this trend.
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Page 20
Appendix Appendix Table: Sales Forecast Sales Forecast Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
800 450 600 2,970 2,700 0 7,520
840 473 630 3,119 2,835 0 7,896
882 496 662 3,274 2,977 0 8,291
988 556 741 3,667 3,334 0 9,286
1,106 622 830 4,107 3,734 0 10,400
1,250 703 938 4,641 4,219 0 11,752
1,413 795 1,060 5,245 4,768 0 13,280
1,526 858 1,144 5,664 5,149 0 14,342
Unit Prices Coffee (based on average) Specialty Drinks (based on average) E-mail Memberships Hourly Internet Fees Baked Goods (based on average) Other
Jan $1.00 $2.00 $10.00 $2.50 $1.25 $0.00
Feb $1.00 $2.00 $10.00 $2.50 $1.25 $0.00
Mar $1.00 $2.00 $10.00 $2.50 $1.25 $0.00
Apr $1.00 $2.00 $10.00 $2.50 $1.25 $0.00
May $1.00 $2.00 $10.00 $2.50 $1.25 $0.00
Jun $1.00 $2.00 $10.00 $2.50 $1.25 $0.00
Jul $1.00 $2.00 $10.00 $2.50 $1.25 $0.00
Aug $1.00 $2.00 $10.00 $2.50 $1.25 $0.00
Sales Coffee (based on average) Specialty Drinks (based on average) E-mail Memberships Hourly Internet Fees Baked Goods (based on average) Other Total Sales
$800 $900 $6,000 $7,425 $3,375 $0 $18,500
$840 $945 $6,300 $7,796 $3,544 $0 $19,425
$882 $992 $6,615 $8,186 $3,721 $0 $20,396
$988 $1,111 $7,409 $9,168 $4,167 $0 $22,844
$1,106 $1,245 $8,298 $10,269 $4,668 $0 $25,585
$1,250 $1,406 $9,377 $11,604 $5,274 $0 $28,911
$1,413 $1,589 $10,596 $13,112 $5,960 $0 $32,670
Jan $0.50 $2.50 $0.63 $0.31 $0.00 $0.25
Feb $0.50 $2.50 $0.63 $0.31 $0.00 $0.25
Mar $0.50 $2.50 $0.63 $0.31 $0.00 $0.25
Apr $0.50 $2.50 $0.63 $0.31 $0.00 $0.25
May $0.50 $2.50 $0.63 $0.31 $0.00 $0.25
Jun $0.50 $2.50 $0.63 $0.31 $0.00 $0.25
$400 $1,125 $378 $921 $0 $0 $2,824
$420 $1,181 $397 $967 $0 $0 $2,965
$441 $1,240 $417 $1,015 $0 $0 $3,113
$494 $1,389 $467 $1,137 $0 $0 $3,487
$553 $1,556 $523 $1,273 $0 $0 $3,905
$625 $1,758 $591 $1,439 $0 $0 $4,413
Unit Sales Coffee (based on average) Specialty Drinks (based on average) E-mail Memberships Hourly Internet Fees Baked Goods (based on average) Other Total Unit Sales
Direct Unit Costs Coffee (based on average) Specialty Drinks (based on average) E-mail Memberships Hourly Internet Fees Baked Goods (based on average) Other Direct Cost of Sales Coffee (based on average) Specialty Drinks (based on average) E-mail Memberships Hourly Internet Fees Baked Goods (based on average) Other Subtotal Direct Cost of Sales
M
0% 0% 0% 0% 0% 0%
0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
k r a
n i t e
P g
n la
e l p Oct
Nov
Dec
1,648 927 1,236 6,118 5,561 0 15,489
1,780 1,001 1,335 6,607 6,006 0 16,729
1,922 1,081 1,442 7,135 6,487 0 18,067
2,076 1,168 1,557 7,706 7,006 0 19,512
Sep $1.00 $2.00 $10.00 $2.50 $1.25 $0.00
Oct $1.00 $2.00 $10.00 $2.50 $1.25 $0.00
Nov $1.00 $2.00 $10.00 $2.50 $1.25 $0.00
Dec $1.00 $2.00 $10.00 $2.50 $1.25 $0.00
$1,526 $1,716 $11,443 $14,161 $6,437 $0 $35,283
$1,648 $1,854 $12,359 $15,294 $6,952 $0 $38,106
$1,780 $2,002 $13,347 $16,517 $7,508 $0 $41,154
$1,922 $2,162 $14,415 $17,839 $8,108 $0 $44,447
$2,076 $2,335 $15,568 $19,266 $8,757 $0 $48,002
Jul $0.50 $2.50 $0.63 $0.31 $0.00 $0.25
Aug $0.50 $2.50 $0.63 $0.31 $0.00 $0.25
Sep $0.50 $2.50 $0.63 $0.31 $0.00 $0.25
Oct $0.50 $2.50 $0.63 $0.31 $0.00 $0.25
Nov $0.50 $2.50 $0.63 $0.31 $0.00 $0.25
Dec $0.50 $2.50 $0.63 $0.31 $0.00 $0.25
$706 $1,987 $668 $1,626 $0 $0 $4,986
$763 $2,146 $721 $1,756 $0 $0 $5,385
$824 $2,317 $779 $1,896 $0 $0 $5,816
$890 $2,503 $841 $2,048 $0 $0 $6,281
$961 $2,703 $908 $2,212 $0 $0 $6,784
$1,038 $2,919 $981 $2,389 $0 $0 $7,327
r P
S o
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
Sep
m a
Page 21
Appendix Appendix Table: Contribution Margin Contribution Margin Sales Direct Cost of Sales Other Variable Costs of Sales Total Cost of Sales Gross Margin Gross Margin % Marketing Expense Budget Local TV Spots Print Materials Other Total Sales and Marketing Expenses Percent of Sales Contribution Margin Contribution Margin / Sales
M
k r a
Jan $18,500 $2,824 $0 -----------$2,824
Feb $19,425 $2,965 $0 -----------$2,965
Mar $20,396 $3,113 $0 -----------$3,113
Apr $22,844 $3,487 $0 -----------$3,487
May $25,585 $3,905 $0 -----------$3,905
Jun $28,911 $4,413 $0 -----------$4,413
Jul $32,670 $4,986 $500 -----------$5,486
Aug $35,283 $5,385 $500 -----------$5,885
$15,676 84.74%
$16,460 84.74%
$17,283 84.74%
$19,357 84.74%
$21,680 84.74%
$24,498 84.74%
$27,183 83.21%
$29,398 83.32%
Jan $0 $500 $250 -----------$750 4.05%
Feb $2,000 $500 $100 -----------$2,600 13.38%
Mar $0 $500 $250 -----------$750 3.68%
Apr $2,000 $500 $100 -----------$2,600 11.38%
May $0 $500 $250 -----------$750 2.93%
Jun $2,500 $500 $500 -----------$3,500 12.11%
Jul $2,500 $500 $250 -----------$3,250 9.95%
Aug $2,500 $500 $500 -----------$3,500 9.92%
$14,926 80.68%
$13,860 71.35%
$16,533 81.06%
$16,757 73.36%
$20,998 72.63%
$23,933 73.26%
$25,898 73.40%
n i t e
P g
n la $20,930 81.81%
r P
S o
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
e l p
Sep $38,106 $5,816 $500 -----------$6,316
Oct $41,154 $6,281 $500 -----------$6,781
Nov $44,447 $6,784 $500 -----------$7,284
Dec $48,002 $7,327 $500 -----------$7,827
$31,790 83.42%
$34,373 83.52%
$37,163 83.61%
$40,176 83.70%
Sep $2,500 $500 $250 -----------$3,250 8.53%
Oct $2,500 $750 $500 -----------$3,750 9.11%
Nov $2,500 $1,000 $250 -----------$3,750 8.44%
Dec $4,000 $500 $100 -----------$4,600 9.58%
$28,540 74.90%
$30,623 74.41%
$33,413 75.17%
$35,576 74.11%
m a
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