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Acme Consulting offers high-level expertise in international high-tech business development, channel development, distribution strategies, and marketing of high-tech products. It focuses on providing two kinds of international triangles:

  • Providing United States clients with development for European and Latin American markets.
  • Providing European clients with development for the United States and Latin American markets.

This year we intend to take on consulting work in related markets, specifically the rest of Latin America and the better markets in the Far East. We will also look for additional leverage by taking brokerage positions and representation positions to create percentage holdings in product results.

Market Needs

When a high-tech manufacturing company wants to open a new market outside its home country, there is a temporary need for very high-powered expertise. They need to establish distribution, evaluate distributors' merits and problems, select and open new channels. While this is also true of all other manufacturers, we specialize in high technology products because we have true expertise in this area.

Our clients come to us for scalable, temporary expertise. They understand that our kind of expertise would be very difficult and expensive to get from full-time, permanent employees. Furthermore, their needs are temporary: the crunch is at the time of opening the new market and setting up the channel; later on it is not as important.

From the point of view, as managers, our clients come to us at least in part because we reduce their sense of risk in the management and politics of new market introductions. If things go wrong, they have experts to blame. If things go right, they get the credit. There's the old saying that "nobody ever got fired for choosing IBM," meaning choosing a highly respected visible source for computers. We are that kind of low-risk option for opening new markets. The CYA factor is important.

The Market

Acme Consulting focuses on high-technology manufacturers of computer hardware and software, services, and networking, who want to sell into markets in the United States, Europe, and Latin America. These are mostly larger companies, and occasionally medium-sized companies.

Our most important customers are executives in larger corporations. They are marketing managers, general managers, sales managers, sometimes charged with international focus and sometimes charged with market or even specific channel focus. They do not want to waste their time or risk their money looking for bargain information or questionable expertise. As they go into markets looking at new opportunities, they are very sensitive about risking their company's name and reputation.

Market Analysis

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Market Analysis
  20062007200820092010 
Potential CustomersGrowth     CAGR
US High Tech10%5,0005,5006,0506,6557,32110.00%
European High Tech15%1,0001,1501,3231,5211,74915.00%
Latin America35%25033845661683235.07%
Other2%10,00010,20010,40410,61210,8242.00%
Total6.27%16,25017,18818,23319,40420,7266.27%

Market Demographics

Large high-tech manufacturer corporations

Our most important market segment is the large manufacturer of high-technology products, such as Apple, Hewlett-Packard, IBM, Microsoft, Siemens, or Olivetti. These companies will be calling on Acme for development functions that are better spun off than managed in-house, for market research, and for market forums.

Medium-sized high-tech growth companies

Particularly in software, multimedia, and some related high-growth fields, Acme will offer an attractive development alternative to the company that is management constrained and unable to address opportunities in new markets and new market segments.

Market Demographics

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Market Demographics
      
Market SegmentsSummaryDecision LevelLoyalty StatusBuyer ReadinessProduct Attitude
US High TechMatureManagerMediumSkepticalPositive
European High TechGrowthDirector and upHighInformedIndifferent
Latin AmericaGrowthCEOHighInformedIndifferent
OtherDevelopVariableVariableVariableIndifferent

We stand to benefit from some specific market trends:

  • There is a major trend towards internationalization. The Internet has brought a larger world into direct communication with the manufacturers. Europe has created a major new unified market, this time for real. Latin America is healthy and growing. Asia, despite recent setbacks, is still a very good market. Our potential client base, the manufacturers, wants to expand into new markets.
  • Communications technology is a new industry explosion. Also because of the Internet, growth in communications technology items is explosive. Modems, network cards, communications software, routers, cables, connectors, all of these are growing at 35% per year and up. Margins aren't great in the more standard hardware categories, but growth is enormous.
  • Contracting, consulting, and ad-hoc management teams are a trend. Even the larger businesses are turning more frequently to temporary expertise instead of permanent fixed cost employees. This is the latest new application of the buzzword "scalable." Acme Consulting is an especially attractive alternative to our clients, because of the economic advantages of variable vs. fixed costs, and the growing liabilities and overhead of taking on long-term employees.

Market Growth

The U.S. Association of Marketing Consultants reports a 30% growth in average revenues for consultants focusing on marketing of high-tech products. We are a subset of this market, possibly due for even higher growth than the mainstream. The local electronics industry association in California reports a trend towards additional consulting solutions, as manufacturers turn to variable cost solutions.

We talked to industry associations in Japan and several in Europe. Overall, the growth in interest for moving into new markets is phenomenal. Tahahashi Sato, director of the local association in Tokyo, told us "we don't have statistics, but the growth in new international marketing projects has to be greater than 100 percent per year." Jens Lundeson, of the Association in Europe, said "We see growth in this kind of project at 40 percent or better per year."

Macroenvironment

New technology has become the driving force of our market. The Internet is changing high-tech marketing overnight. While the manufacturers used to deal with distributors in smaller national markets, nowadays the distributors are terribly concerned about our pricing and marketing over the Internet.

On one hand, the manufacturers need loyal local allies, good distribution, and value added. On the other hand, they can't pretend to offer protected markets. The Internet changes the game.

Another major factor is the growth expected in Europe and Latin America. While Asian markets are hanging back a bit with the lingering effect of recent economic problems, the Latin American markets are growing smartly as a result of decreasing protectionism, and the European markets are enjoying the new Eurodollar boom.

The Company

Acme Consulting is a California C corporation based in Santa Clara County, owned by its principal investors and principal operators, providing high-level expertise in international high-tech business development, channel development, distribution strategies, and marketing of high-tech products. It focuses initially on providing two kinds of international triangles:

  • Providing United States clients with development for European and Latin American markets.
  • Providing European clients with development for the United States and Latin American markets.

As it grows it will take on people and consulting work in related markets, such as the rest of Latin America, the Far East, and similar markets. It will also look for additional leverage by taking brokerage positions and representation positions to create percentage holdings in product results.

Mission

Acme Consulting offers high-tech manufacturers a reliable, high-quality alternative to in-house resources for business development, market development, and channel development on an international scale. We are a true alternative to in-house resources because we offer a very high level of practical experience, know-how, contacts, and confidentiality.

Clients must know that working with Acme is a more professional, less risky way to develop new areas than working completely in-house with their own people. Acme must also be able to maintain financial balance, charging a high value for its services, and delivering an even higher value to its clients.

We focus on development in the European and Latin American markets, or for European clients in the United States market. We provide our employees with an exciting, intellectually challenging workplace in which intelligence and initiative is rewarded, hierarchies are minimized, and everybody is fairly compensated.

Service Offering

Our most standard offering will be consulting, normally billed by the project, with project milestones build in. We will not quote rates per hour, per day, or per anything, but we will develop a proposal and then bill according to completion.

We will be open to considering retainer consulting relationships if the offer comes up.  Generally we prefer the project though, because it matches our sense of the client's need.

We may from time to time prepare multi-client studies, almost as if they were products, but these will be pre-sold to collections of clients before development. For example, new developments in the Mexican market.

The service itself is a key component to our marketing mix. Our service should be our best advertisement. In this case even more so than with many other similar businesses, because our specialization on channels for international product marketing means we develop contacts with people who can be our recommenders.

We need to fulfill the promise we make: we take a product across national boundaries into new markets, explore channels, guide our client through the maze, and establish the relationships the client needs. This is a very focused deliverable. We aren't just doing international marketing or marketing consulting; we're getting products into channels.

 

Positioning

For high-technology companies who are looking to enter new international markets, Acme Consulting offers a unique team of experienced managers with proven expertise, on a temporary contract basis. Unlike in-house expertise, Acme Consulting is a temporary variable cost. Unlike most management consultants, Acme Consulting is specialized on a very focused expertise that is hard to duplicate.

SWOT Summary

The SWOT analysis covers strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are generally internal attributes, which we can address by changing our business. Opportunities and threats are generally external.

Overall, the mix is exciting. We live in an age of growth, change, and business revolution. The Internet offers us opportunities and threats. We need to make our dealing with it one of our biggest strengths, to minimize our weaknesses.

Strengths

  1. True expertise. All of our principals know this area very well. Our experience and expertise is better than anybody we know of in this particular niche area.
  2. Dominance of communications technologies from a users' point of view. We have an excellent website, secure File Transfer Protocol (FTP) facilities with password protection for sending and receiving documents from clients, major bandwidth, and an automatic link to training allies to help clients come up to speed with the facilities we offer. We can even hold Internet meetings with shared interface and visuals.
  3. Manageable size. We don't have to support a large overhead, and our clients know that we deliver what we promise ourselves. Our competition, the larger consulting houses, tend to build on the structure of the major partners doing the selling and younger associates, with far less experience, actually delivering the consulting.
  4. Contacts. Years of industry experience means a lot of word-of-mouth marketing, contacts, and networking.

Weaknesses

  1. Marketing. As a group, we are good at the direct sales involved in making a close, but we don't have the resources required to do much general marketing. We will depend on word of mouth first as our main form of generating leads.

  2. Staff. Without the overhead of staff, we can't leverage on people to develop documents and presentations, research in detail, and fill in the blanks. We are short on support for telephones, fax, and email.

  3. Brand. Sometimes a Booz Allen or McKinsey is a safer buy for the executives, in the sense of "nobody ever got fired for hiring IBM." We are a new entity, we can be perceived as an innovative -- and therefore risky -- choice.

Opportunities

  1. Internet growth. Companies are being dragged into worldwide marketing, like it or not. Growth rates are very high, opportunities are obvious.
  2. International market growth. Europe and Latin America are booming. Asia has suffered a bit but is recovering. Manufacturers are anxious to take their new technologies across borders.
  3. Growing red tape involved with hiring full-time employees, especially internationally, especially at the executive level.

Threats

  1. The Internet is a threat as well as an opportunity. Our expertise is about crossing borders, managing multiple markets, and the problems we solve are being reduced in importance by the growing availability of information. Specific example: software companies used to charge huge premiums for software available in the different smaller markets, but their potential customers are now much more likely to see available prices elsewhere and buy over the net.
  2. The larger, branded competition is recognizing our niche. They are beginning to compete in our area, recognize our niche. We are no longer alone.
  3. New competitors are developing in new markets. Particularly as the European market grows, competitors developing in that area become more significant.

Historical Results

To analyze our historical data, we've made a projection based on what might have been, had the partners been involved in a separate company. It is a composite of the combined consulting of the three main partners.

What we see in the table is that we're taking up a very small portion of the overall consulting dollar spent in this market, effectively our market share is less than one percent. There is a lot of room to grow. We have always been profitable, but we expect to do much better than we have after we combine our forces.

Historical Data

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Historical Data
     
Variable 200320042005
Industry Revenue $10,000,000$15,000,000$20,000,000
Company Market Share 0%0%0%
Company Revenue $10,000$37,500$84,000
Industry Variable Costs $2,500,000$3,750,000$5,000,000
Company Variable Costs $2,500$9,375$21,000
Industry Gross Contribution Margin  $7,500,000$11,250,000$15,000,000
Company Gross Contribution Margin $7,500$28,125$63,000
Marketing Expenses $1,750$3,500$5,750
Company Net Contribution Margin $5,750$24,625$57,250

Competition

The key element in purchase decisions made at the Acme client level is trust in the professional reputation and reliability of the consulting firm. 

The competition comes in several forms:

  1. The most significant competition is no consulting at all, companies choosing to do business development, channel development and market research in-house. Their own managers do this on their own, as part of their regular business functions. Our key advantage in competition with in-house development is that managers are already overloaded with responsibilities; they don't have time for additional responsibilities in new market development or new channel development. Also, Acme can approach alliances, vendors, and channels on a confidential basis, gathering information and making initial contacts in ways that the corporate managers can't.

  2. The high-level prestige management consulting: XXXXX,XXXXXXXXXXXX,XXXXX-XXXXX, (names omitted to protect confidentiality), etc. These are essentially generalists who take their name-brand management consulting into specialty areas. Their other very important weakness is the management structure that has the partners selling new jobs, and inexperienced associates delivering the work. We compete against them as experts in our specific fields, and with the guarantee that our clients will have the top-level people doing the actual work.

  3. The third general kind of competitor is the international market research company: XXXXXXXXX, XXXXXX, XXXX-XXXXX, (names omitted to protect confidentiality), etc. These companies are formidable competitors for published market research and market forums but cannot provide the kind of high-level consulting that Acme will provide.

  4. The fourth kind of competition is the market-specific smaller house. For example: Nomura Research in Japan, Select S.A. de C.V. in Mexico (now affiliated with IDC).

  5. Sales representation, brokering, and deal catalysts are an ad-hoc business form that will be defined in detail by the specific nature of each individual case.

Direct Competition

Direct competitors are the name-brand consulting firms and smaller consulting firms. These are competing offerings of similar services, presumably possibilities that come up in discussions as our target market looks at way to add expertise before building programs to reach new markets.

Growth and Share Analysis

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Growth and Share
    
CompetitorPriceGrowth RateMarket Share
MC$205%20%
BA$155%30%
SRI$187%10%
NRA$2310%10%
US$3020%5%
Other$185%25%
    
Average$20.678.67%16.67%
Total$124.0052.00%100.00%

Indirect Competition

Indirect competition is everywhere. Its strongest and most important form is the decision to stay in-house and manage market entry with existing marketing teams. From there it goes into horizontal marketing consulting, distributors offering cross-market options, and many other possibilities.

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