( Insert Names of principles, address and phone # of business)
Executive Summary 3
Mission statement & Business Objectives 4
Management 5
Define the Industry 6
Products and Services
Design and Development
Market and Competition
Marketing Strategy
Executive summary
Digital chair limited is a UK based limited liability company with Mark &Mary as the majority owners. Its main business is the manufacture and sale of smart baby car chairs that will be fitted with digital applications to ensure that the baby is meaningfully engaged and allow the driver to concentrate. It’s a start up business that expects to break even in the first year of operation, as a result of the managements understanding of the business as well as a robust operational and management strategy.
The business was conceived out of the perceived product gap with regard to baby car seats. The market today is laden with many types and models of baby seats, which as basic models whose main purpose is to strap the baby safe, mainly to meet government regulations. None of the dealers in the market has considered the need for some comfort to the child, as well some educative engagements to ensure a continuous learning process for the child and this is the gap that digital chair limited seeks to fill.
Our product will be a unique offering in the market. Its intended to create not only comfort to the little one, but also digital applications such as games and other gadgets that are expected to keep the child busy, and educated at the same time. We carried out a market research and intend to incorporate the customer feedback in the design of this baby car chair, so as to guarantee instant acceptance in the market.
The company seeks financing to the tune of $500,000 for the financiers 40% stake in the business. This figure will be utilized in the acquisition of the manufacturing plant as well as payment of operational costs for the first year of business. This is a rather significant amount of money, but our financial projects indicate that by the third year, the company will be raking in $130,000 profits net of tax, and will therefore be in a position to stand alone.
A summary income statement for the company for the three years is shown on appendix 1. Additionally, the management is competent that there is enough knowledge on the product, as both directors have been long serving executives in leading baby stroll and car seat manufacturing companies for many years.
Vision
The company’s vision is to become the leading producer and seller of smart baby car chairs in the region
Mission
The mission of the company is simply to attract and retain clients by ensuring that the products are of the best possible quality, available and designed to the needs and comfort of your baby.
Objectives
Management
An organizational chart for the proposed company is as shown below
DIRECTORS
PRESIDENT AND CEO
Chief finance Chief operating Chief Risk manager
Officer Officer Engineer
Finance Operations Production Risk management
The diagram above outlines the organizational structure for the company. At the helm are the directors. These are mainly the owners of the business are people with great knowledge in this business, having worked in the industry for many years.
The president and CEO will be headhunted from leading manufacturers of baby car seats and will be an individual with a proven track record of management skills, financial literacy and business leadership. He/she will be expected to offer leadership and steer the company to profitability. He will also be expected to oversee the day to day running of the company affairs.
The chief finance officer, operating officer, engineer and risk manager will be people with great experience in their specific areas. They will be expected to manage specific departments in the company to ensure timely delivery of goods and smooth production. Their roles will be very significant in the company and therefore, these will be people who have proven track records of performance in their respective fields. They will be in charge of staff and departments outlined and will be expected to motivate their teams to work tirelessly towards the attainment of the company’s objectives.
Market trends and industry analysis
The 2007/8 global financial crisis did not spare the car seat manufacturing industry. It struggled through the recession but things are beginning to look up. As IBIS World industry analysts explained, the recession saw the reduction in the consumption of this product mainly due to falling disposable income. Although a car seat was necessary as a result of legal requirements, consumers elected to purchase cheaper brands or even used products and this had a defining impact on manufacturers of these products.
Analysts however note that the economic environment has been improving over the last one to two years as a result of an increased birth rate and disposal income. Legal requirements that demand for the purchase of new and more advanced car seats to meet required standards are also increasing the market.
Although tighter regulations are demanding that manufacturers insist on quality production materials, leading to a higher cost of production, it is believed that market signals indicate that the market has a bright future, due to the fact that such a product would still sell, regardless of the conditions due to the perceived need and safety for the child.
In 2012, the industry revenues amounted to $332m, which is 4% market growth. Smart baby car chair is expected to be introduced for the high end market. This is perceived to be a market that would be willing to spend more for comfort. It’s also a market segment that is not expected to be responsive to price elasticity and has a higher disposable income. This means that regardless of the prevailing market and economic conditions, this segment of the market is unlikely to cut on demand, and this will guarantee a continuing growth for the company’s revenues. A full report of the words largest producers of baby car seats can be found on www.ibisworld.com.
Product & Services
Smart baby car chair as the name describes is a smart design of car baby chairs that will be designed with the needs of the modern child and parents in mind. The chair will be installed with child friendly applications that will allow the baby to be engaged meaningfully as the parent or guardian drives. Unlike the normal car chairs, the smart baby chair will be designed with extra care to ensure that the Childs comfort is fully taken to consideration.
As explained earlier, children’s gadgets, games and other applications will be made accessible to the child during the journey and this will not only engage the child, but will also give peace of mind to the driver, since they are at least aware what the little one is up to, and will in fact make it quite possible to travel even with the young ones with ease.
One key selling point for this product is that the development team has done a market survey, to inquire form parents, what sort of applications they would like to have on the chair, and their findings have been incorporated in the manufacture of this chair and this is expected to result to almost instant acceptance of the chair in the market. Some of the key highlights of this research is that the games to be installed must be educative to the child in one way or another, while another is that the whole arrangement must not result to the inconvenience in the car in terms of space.
The company also intends to offer free after sales service to buyers of the chair. Additionally, the company shall introduce a ‘refer a friend’ reward scheme that will see customer referrals get rewards amounting to 15% of the cost of additional purchases.
The unique design and functionalities to be embedded in the chair are also expected to be additional unique selling points for this product.
Lastly, in order to stay ahead of competition, the company intends to engage in aggressive marketing of the product especially during the launch, and will seek to engage the endorsement of health institutions and practitioners as well as other factors on the benefits of such a chair in the car.
Market and competition
The company has particular strengths in the product design and marketing strategies. The intended baby car chair is expected to be in a class of its own in comparison with what is on offer by competitors in the market. The clients envisaged marketing strategy is expected to create immediate product awareness in the market. During the product research, awareness was created on the intended launch of the product when the design had been completed. Additionally, involvement of the consumers in the product design is expected to create consumer immediate identification with the product.
The discount scheme that has been explained earlier is also expected to play a significant role in ensuring a larger market for the product. Lastly, the choice of the market segment is expected to ensure that even with poor economic conditions, the company still maintains their sales levels.
The company has quite a number of opportunities. Key among this is the expansion of the product presence to other affluent parts of the world. The opportunities created by the adoption and acceptance of e- commerce as a mode of trade is expected to enable the company to market her products all over the world without necessarily having to set a manufacturing plant in those particular areas as everything can be traded online.
One of the strongest company weaknesses has to do with the relative new entry to an already crowded market of baby car seats. Being a new entrant, the company management envisages quite a number of teething problems which may be a major setback especially in an industry that is already developed
The main threat to this business as explained earlier is majorly government’s regulations. From time to time, governments put additional requirements for the manufacture of baby seats and this is an additional cost to the company.
Another threat is of course competition. Although the company expects to obtain a patent for the smart baby car chair, the law is not strict enough to prohibit clever imitation of the product, which would be detrimental to the operations of the company.
With proper preparations, it’s expected that most of these challenges will be identified and proper contingency measures put in place to ensure that such eventualities are dealt with, as they arise.
Marketing strategies
In outlining the marketing strategies, we have to explain the companies understanding of the product, pricing, and promotion and placing.
Product
As previously explained, we intend to develop a unique product that is expected to be marketed amongst the upper end consumers, and as such, the product has to be of the highest quality possible as its understood that such a clientele is likely to pay more for a better design and comfort.
Pricing
As a high-end product, the entry pricing strategy for this product will be slightly higher than the existing ones. The management however intends to put in a lot of effort in marketing the product, even before its launch so as to benefit from the curiosity of consumers despite the relatively higher price. As the product is entrenched in the market, the management will consider marginally reducing the price.
The product is expected to be priced in such a way that most of the initial costs will be recouped in the first year of launch, and the company is also expected to break even after the first year.
Promotion
The object of this is to ensure that the company reaches as large number of customers as possible at the least cost. The company expects to use print, broadcast media as well as e marketing to reach a large target market. An outline of the projected administrative expenses is shown in appendix 1 below. Online marketing will specifically be targeted as a method of promotion since it’s cheaper and reaches a larger audience.
Since the company expects to make a significant amount of sales online, price segmentation will be possible. Overseas customers will pay more, besides the shipping expenses.
Placing
The company expects to open a distribution store in most of the major cities in the region. Arrangements are also being made to partner with distributors from various regions so that they can distribute the product. The company expects to cut significantly on selling and distribution expenses by using this strategy.
Appendix 1 2013 2014 2015
$ ‘000 $ ‘000 $ ‘000
Sales 500 850 1250
Cost of sales 330 535 740
Gross profit 170 315 510
Operating expenses 150 235 325ote
Net profit 20 80 185
Interests and taxes 6.25 24 55.5
Profit attributable to owners 13.75 56 129.5
Note
Appendix 1 shows the company’s proforma income statement for three years starting 2013.
Tax rates are assumed to be at a rate of 30%
References
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Aaker, D. A. 2004 Brand Portfolio Strategy, New York: Free Press.
Adcock D., Al Halborg and Ross C. (2001). Marketing: principles and practice 4th ed. New York: Pearson Prentice Hall.
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Kotler, Philip; Gary Armstrong (1989). Principles of Marketing, fourth edition Annotated Instructor's Edition. Prentice-Hall
