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January 2001

This sample marketing plan has been made available to users ofMarketing Plan Pro,marketing planning software published by Palo Alto Software. Names, locations andnumbers may have been changed, and substantial portions of text may have been omittedfrom the original plan to preserve confidentiality and proprietary information.

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Copyright Palo Alto Software, Inc., 1995-2002


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Upon request, this document is to be immediately returned to _________________________.

___________________Signature

___________________Name (typed or printed)

___________________

Date

This is a marketing plan. It does not imply an offering of securities.


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Table Of Contents

1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2.0 Situation Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1 Market Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2.1.1 Market Demographics . . . . . . . . . . . . . . . . . . . . 22.1.2 Market Needs . . . . . . . . . . . . . . . . . . . . . . . . 32.1.3 Market Trends . . . . . . . . . . . . . . . . . . . . . . . . 32.1.4 Market Growth . . . . . . . . . . . . . . . . . . . . . . . . 4

2.2 SWOT Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

2.2.1 Strengths . . . . . . . . . . . . . . . . . . . . . . . . . . 42.2.2 Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . 52.2.3 Opportunities . . . . . . . . . . . . . . . . . . . . . . . . 52.2.4 Threats . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

2.3 Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.4 Product Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.5 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.6 Critical Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

3.0 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63.1 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73.2 Marketing Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . 73.3 Financial Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . 73.4 Target Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73.5 Positioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83.6 Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83.7 Marketing Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

4.0 Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94.1 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . 94.2 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.3 Expense Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

5.0 Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115.1 Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125.2 Marketing Organization . . . . . . . . . . . . . . . . . . . . . . . . 125.3 Contingency Planning . . . . . . . . . . . . . . . . . . . . . . . . . 13


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1.0 Executive Summary

Kaolin Calefactors (KC) is an Oregon company that designs and manufactures production andcustom dishware. The designs can be anything that the customer would like, however, SueGlazer's genre is modern or popular art. The typical customer is either someone purchasing ahandmade gift for a friend/relative, or someone who is interested in owning unusual everydaydishware.

Kaolin Calefactors is a unique business opportunity that will allow Sue Glazer to combine her lovefor ceramics and parlay this affinity into a money making venture. Sue will leverage her creativeartistic skills to create innovative and attractive designs that will generate a strong demand.Additionally, by offering low production, as well as custom designs, Kaolin will win overcustomers because of the great deal of flexibility. Kaolin will gain a loyal customer base through

a customer-centric business model. This business model makes the customer's satisfaction thehighest priority.

Kaolin Calefactors will leverage its competitive advantage of a customer-centric business modelto rapidly gain market share in the custom dishware niche. Profitability will be reached by monthnine and revenues for year three are projected to reach $78,000.

2.0 Situation Analysis

Kaolin Calefactors is a start-up company located in Eugene, Ore. Marketing will be a criticalcomponent of the business to ensure success and profitability. The basic market need is acreative, unique, ceramic dish maker.

2.1 Market Summary

Kaolin Calefactors possesses good information about the market and knows a great deal aboutthe common attributes of the most prized and loyal customers. Kaolin Calefactors will leveragethis information to better understand who is served, their specific needs, and how Kaolin canbetter communicate with them.

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Gift purchasers

End consumers

Target Markets

Table 2.1: Target Market Forecast

Target Market ForecastPotential Customers Growth 2001 2002 2003 2004 2005 CAGR Gift purchasers 8% 21,455 23,171 25,025 27,027 29,189 8.00%End consumers 9% 19,886 21,676 23,627 25,753 28,071 9.00%Total 8.48% 41,341 44,847 48,652 52,780 57,260 8.48%

2.1.1 Market Demographics

The profile for Kaolin's typical customer consists of the following geographic, demographic, andbehavior factors:

Geographics

The immediate geographic area is the city of Eugene with a population of 130,000. A 50 mile geographic area is in need of our services. This is for the local customers, the

website will allow Kaolin Calefactors to reach anyone within the United States withInternet access.

The total target is estimated at 41,341.

Demographics

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Have an artistic flair, or wish they did. Values handmade items relative to mass produced goods.

2.1.2 Market Needs

Kaolin Calefactors is providing its customers with a wide selection of handmade ceramicdishware. Kaolin seeks to fulfill the following benefits that are important to their customers:

Selection. A wide range of choices for styles and finishes of ceramic dishware. Accessibility. The patron can have the finished products shipped to them anywhere in

the United States.

Customer service. Kaolin's customer-centric business model ensures complete customersatisfaction.

Competitive pricing. Kaolin's prices are competitive relative to other handmade ceramicdishware.

2.1.3 Market Trends

The market trend for dishware is an increased demand for creative and artistic designs as well ascustom design work. This trend can be explained in part by the fact that during the mid-nineties,the market was flooded with mass production artsy dishware. The market was soon overwhelmedwith tons of similar dishware that tries to appear artsy, but because of the large scale ofproduction, was just garish designs.

After the market was flooded with so many similar, common designs, demand was generated forcustom artists to produce dishware and other ceramics that had unique artful designs and werenot mass produced.

30,000

40,000

50,000

60,000

Gift purchasers

E d

Market Forecast

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2.1.4 Market Growth

In 1999, the ceramic dishware market in the USA reached $765 million dollars in revenue. Themass market is forecasted to grow at an unexciting 4%, however, because of a recent increase in

demand, the custom handmade niche is forecasted to grow at 7.5% for the next several years.

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6.00%

7.00%

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Gift purchasers End consumers

arget Market Growth

2.2 SWOT Analysis

The following SWOT analysis captures the key strengths and weaknesses within the company,and describes the opportunities and threats facing Kaolin Calefactors.

2.2.1 Strengths

Strong relationships with raw material vendors. A partially taught, primarily instinctual, eye for art and up and coming styles. An efficient style for construction of ceramic pieces, decreasing the labor costs per piece. High customer loyalty and referral rate.

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2.2.2 Weaknesses

Kaolin Calefactors lacks brand equity. A limited marketing budget to develop brand awareness.

The struggle to grow the business while at the same time attending to all of the day-to-day activities.

2.2.3 Opportunities

Participating in a market niche that is growing at a faster rate than the larger generalceramics market.

Increased sales opportunities from mail-order customers who use the website to gaininformation and see examples of Sue's artistic ability.

The ability to increase the profit margin as variable costs are decreased due to operatingefficiencies.

2.2.4 Threats

Competition from a large reseller of dishware who might steal some of Sue's designs andhave them produced offshore.

Quality control problems with the raw materials that could render an entire batch ofproducts ruined.

The continued decrease in the cost of dishwashers (the decrease in cost can generally becorrelated by harsher handling of the dishware to be cleaned by the dishwasher) makingit conceivable that handmade dishware will have to be washed by hand.

2.3 Competition

The competition consists of different sources.

Commercial dishware manufacturers. This competitor mass manufactures a widerange of dishware. These companies appeal to someone that is looking for generaldishware. These competitors serve people that are more interested in function instead ofaesthetics.

Assorted craftspeople. This group of competitors is serving the segment of people thatare purchasing ceramics as gifts.

Other potters. This group is the most direct competitor in terms of business activities,but not necessarily the most vigorous. The reason they are not the most vigorous

tit i b t tt th t ll th i d t k d

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2.4 Product Offering

Kaolin Calefactors makes production and custom dishware. KC manufactures a line of 12production styles of dishware, as well as offers the option of custom designs. The custom designs

can be either based on a design KC has done in the past that is displayed in a portfolio or can bea creation of the customer.

Please note that the use of the term production is not the traditional usage. While Sue does haveproduction designs, all this means is that she makes them for inventory regardless if there is anorder for them. Production in this case does not take on the typical association of "massproduction."

The pieces of dishware that are offered are serving platters, dinner plates, bowls, coffee cups,

and saucers. Other pieces can be created at the request of the customer. The dishware comes inseveral different shapes and glazing options. Kaolin Calefactors products are expensive. KC is nottrying to compete on price, KC will be making high-quality pieces that are all handmade. Someof the more elaborate designs adds significant amounts of time of construction as well as adds tothe price. The price/positioning strategy will be the upper end of the market.

2.5 Keys to Success

Unique, cutting-edge designs. Outstanding customer service. Professionalism. Attention to detail. Having fun while working hard.

2.6 Critical Issues

Kaolin Calefactors is still in the speculative stages as a start up company. Its critical issues are tocontinue to take a modest fiscal approach; expand at a reasonable rate, not for the sake ofexpansion in itself, but because it is economically wise to; and continue to build brand awarenessand develop the customer base.

3.0 Marketing Strategy

Kaolin Calefactors will use a three-pronged approach to marketing. The first prong is becomingvisible at the regional arts and crafts fair. The fairs are a collection of artists, craftsmen, andprospective customers who come together at an event to sell and buy goods. Sue will set up abooth at these fairs and bring a stock of goods which she can sell on-site. Additionally, Sue willh tf li f t k th t ill t t l S t k d t th f i d th

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The third prong to the marketing strategy will be getting Sue's works into galleries and artstores. This marketing strategy will be accomplished by traveling to different galleries and craftstores, meeting with buyers and convincing them to stock Sue's products.

3.1 Mission

Kaolin Calefactors' mission is to design and construct the finest dishware pottery. The designswill be innovative, modern, or custom to the client's wishes. We exist to attract and maintaincustomers. When we adhere to this maxim, everything else will fall into place. Our services willexceed the expectations of our customers.

3.2 Marketing Objectives

Grow total sales by 10% annually. Build customer loyalty through innovative designs, attention to detail, and a customer-

centric approach. Increase the customer base by 15% per year. Generate demand to the point that it exceeds supply, requiring Sue to seek help with

administrative duties.

3.3 Financial Objectives

Decrease costs through operating efficiencies by 5% annually. Increase the return on investment by 3% per year. Reach profitability within eight months.

3.4 Target Markets

The market can be segmented into two different groups:

People that are purchasing the pottery for other people.This segment is looking for a gift for someone and they are looking for something that is unique,something that stands out relative to most other dishware. This segment, more often than not,will be purchasing from the production line of dishware.

People that are buying pottery for themselves.Some people have a very specific idea/style in mind. These people are more likely to opt for acustom design. This can be expected because the custom work is more expensive and typically

i f th it i i t iti t t th t th i d i th

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3.5 Positioning

Kaolin Calefactors will position themselves as the premier artist concentrating on ceramicdishware. Kaolin Calefactors' low production line and custom design work will be attractive to a

wide range of people who appreciate functional art. Kaolin Calefactors will leverage theircompetitive edge to increase their customer base and reinforce the Kaolin brand.

Kaolin Calefactors' competitive edge is their customer-centric approach to business. Thistranslates into bending over backwards to accommodate the customer's specializedneeds. This is most prevalent in the custom designs where Sue works hand-in-hand withthe customer to allow them to realize their dream. This cooperative relationship with thecustomer begins at the design stage and continues throughout the work process.

This customer-centric approach is quite intuitive and effective for several reasons. It isintuitive for Sue because while it is obviously important for the business to make money,Sue believes that if she treats the customers properly the profits will happen as a byproduct of this approach (this is assuming that the proper financials controls are in place).This approach is effective because it is far cheaper to maintain a happy customer than it isto attract new ones.

3.6 Strategies

The single objective is to position Kaolin Calefactors as the premier source for individuallydesigned, artistic ceramic dishware. The marketing strategy will seek to first create customerawareness regarding products/services offered, develop the customer base, and work towardbuilding loyalty and referrals.

The message that Kaolin Calefactors seeks to communicate is that it offers the most creative andunique artistic dishware. This will be communicated through a variety of methods. The first is a

presence at the regional arts and crafts fairs where a booth will be set up and a small display willbe filled with Sue's designs.

A website will be used as a complete catalog of designs and design options. Customers can ordertheir products on the site, as well as submit custom requests. The last method of marketingmessage communication is through a targeted presence at art/crafts stores as well as artgalleries. Having a presence at these galleries will increase the visibility and develop brandawareness of Kaolin Calefactors.

3.7 Marketing Mix

Kaolin Calefactors' marketing mix is comprised of the following approaches to pricing,distribution, advertising and promotion, and customer service:

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4.0 Financials

This section will offer a financial overview of Kaolin Calefactors as it related to the marketingactivities. Kaolin will address break-even analysis, sales forecasts, expenses forecasts, and how

those link to the marketing strategy.

4.1 Break-even Analysis

The Break-even Analysis indicates that $4,449 will be needed in monthly revenue to reach thebreak-even point.

($4,000)

($3,000)

($2,000)

($1,000)

$0

$1,000

$2,000

$3,000

$4,000

$0 $1,600 $3,200 $4,800 $6,400 $8,000

Monthly break-even point

Break-even point = where line intersects with 0

Break-even Analysis

Table 4.1: Break-even Analysis

Break-even Analysis:Monthly Units Break-even 22Monthly Sales Break-even $4,449

Assumptions:Average Per-Unit Revenue $200.00Average Per-Unit Variable Cost $34.00E i d M hl Fi d C $3 693

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4.2 Sales Forecast

The first month of business will be used to set up the work studio as well as line up retail salesoutlets and schedule upcoming craft fairs. There will be a bit of business occurring in month two

with a steady increase by month five.

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Gift purchasers

End consumers

Monthly Sales Forecast

Table 4.2: Sales Forecast

Sales ForecastSales 2001 2002 2003Gift purchasers $21,436 $42,457 $49,854End consumers $19,292 $38,211 $44,869Total Sales $40,728 $80,668 $94,723

Direct Cost of Sales 2001 2002 2003Gift purchasers $3,644 $7,218 $8,475

End consumers $3,280 $6,496 $7,628Subtotal Cost of Sales $6,924 $13,714 $16,103

4.3 Expense Forecast

Th k ti t b b d t d th t th i i i thl t

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$0

$100

$200

$300

$400

$500

$600

$700

$800

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Art fairs

WebsiteGallery networking

Monthly Expense Budget

Table 4.3: Marketing Expense Budget

Marketing Expense Budget 2001 2002 2003Art fairs $2,150 $2,500 $3,000Website $600 $600 $600Gallery networking $1,425 $1,700 $2,500

------------ ------------ ------------Total Sales and Marketing Expenses $4,175 $4,800 $6,100

Percent of Sales 10.25% 5.95% 6.44%Contribution Margin $29,630 $62,154 $72,520Contribution Margin / Sales 72.75% 77.05% 76.56%

5.0 Controls

The purpose of Kaolin Calefactors' marketing plan is to serve as a guide for the organization. Thefollowing areas will be monitored to gauge performance:

Revenue: monthly and annual. Expense: monthly and annual. Repeat business. Customer satisfaction.

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5.1 Implementation

The following milestones identify key marketing programs. It is important to accomplish eachone on time, and on budget.

Jan Feb Mar Apr May Jun Jul

Marketing plan completion

Website online

Art Fair #1

Gallery networking #1

Art fair #2

Gallery networking #2

Milestones

Table 5.1: Milestones

Milestones PlanMilestone Start Date End Date Budget Manager DepartmentMarketing plan completion 1/1/01 2/1/01 SueWebsite online 1/1/01 2/1/01 $600 SueArt Fair #1 1/1/01 4/15/01 $500 SueGallery networking #1 1/1/01 4/15/01 $250 SueArt fair #2 1/1/01 7/31/01 $500 SueGallery networking #2 1/1/01 7/31/01 $200 SueTotals $2,050

5.2 Marketing Organization

Sue will be solely responsible for all marketing activities other than website creation andmaintenance.

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5.3 Contingency Planning

Difficulties and risks:

Problems generating brand awareness. Difficulty meeting demand due to the nature of handmade crafts. Difficulty managing all aspects of the business without slacking in any one area.

Worst case risks may include:

Determining the business cannot support itself on an ongoing basis. Some sort of debilitating illness preventing Sue from continuing her work. Having to liquidate equipment to cover liabilities.

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Table 4.2 Sales Forecast

Sales Forecast PlanSales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecGift purchasers $500 $650 $1,025 $1,400 $1,600 $1,758 $2,014 $2,245 $2,378 $2,578 $2,601 $2,687End consumers $450 $585 $923 $1,260 $1,440 $1,582 $1,813 $2,021 $2,140 $2,320 $2,341 $2,418

Total Sales $950 $1,235 $1,948 $2,660 $3,040 $3,340 $3,827 $4,266 $4,518 $4,898 $4,942 $5,105

Direct Cost of Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecGift purchasers $85 $111 $174 $238 $272 $299 $342 $382 $404 $438 $442 $457End consumers $77 $99 $157 $214 $245 $269 $308 $343 $364 $394 $398 $411Subtotal Cost of Sales $162 $210 $331 $452 $517 $568 $651 $725 $768 $833 $840 $868

Appendix: Kaolin Calefactors

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Table 4.3 Marketing Expense Budget

Marketing Expense Budget Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecArt fairs $100 $100 $50 $500 $100 $100 $500 $100 $200 $200 $100 $100Website $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50Gallery networking $75 $100 $150 $250 $100 $75 $200 $150 $100 $75 $75 $75

------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------Total Sales and Marketing Expenses $225 $250 $250 $800 $250 $225 $750 $300 $350 $325 $225 $225Percent of Sales 23.68% 20.24% 12.84% 30.08% 8.22% 6.74% 19.60% 7.03% 7.75% 6.64% 4.55% 4.41%Contribution Margin $564 $775 $1,366 $1,408 $2,273 $2,547 $2,426 $3,240 $3,400 $3,741 $3,877 $4,012Contribution Margin / Sales 59.32% 62.76% 70.16% 52.92% 74.78% 76.26% 63.40% 75.97% 75.25% 76.36% 78.45% 78.59%

Appendix: Kaolin Calefactors

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