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This sample marketing plan was created with Marketing Plan Pro software.

The marketing plan is built on these truths:

  1. The marketing budget is based on a percentage of sales value. Currently, that value is set at 20%.
  2. Building a strong brand and brand loyalty is critical to the success of JavaNet.
  3. Marketing is a critical component of the JavaNet business plan.
  4. 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.
  5. 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.

Break-even Analysis

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%.

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.

Break-even Analysis

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Break-even Analysis
  
Monthly Units Break-even2,986
Monthly Revenue Break-even$10,002
  
Assumptions: 
Average Per-Unit Revenue$3.35
Average Per-Unit Variable Cost$0.84
Estimated Monthly Fixed Cost$7,500

Sales Forecast

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 Forecast

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Sales Forecast
 20012002200320042005
Unit Sales     
Coffee (based on average)16,23017,85319,63921,60223,763
Specialty Drinks (based on average)9,12910,04211,04712,15113,366
E-mail Memberships12,17313,39014,72916,20217,822
Hourly Internet Fees60,25566,28072,90880,19988,219
Baked Goods (based on average)54,77760,25566,28072,90880,199
Other00000
Total Unit Sales152,564167,820184,602203,062223,368
      
Unit Prices20012002200320042005
Coffee (based on average)$1.00$1.00$1.00$1.00$1.00
Specialty Drinks (based on average)$2.00$2.00$2.00$2.00$2.00
E-mail Memberships$10.00$10.00$10.00$10.00$10.00
Hourly Internet Fees$2.50$2.50$2.50$2.50$2.50
Baked Goods (based on average)$1.25$1.25$1.25$1.25$1.25
Other$0.00$0.00$0.00$0.00$0.00
      
Sales     
Coffee (based on average)$16,230$17,853$19,639$21,602$23,763
Specialty Drinks (based on average)$18,259$20,085$22,093$24,303$26,733
E-mail Memberships$121,726$133,899$147,289$162,018$178,219
Hourly Internet Fees$150,636$165,700$182,270$200,497$220,547
Baked Goods (based on average)$68,471$75,318$82,850$91,135$100,248
Other$0$0$0$0$0
Total Sales$375,323$412,855$454,141$499,555$549,510
      
Direct Unit Costs20012002200320042005
Coffee (based on average)$0.50$0.50$0.50$0.50$0.50
Specialty Drinks (based on average)$2.50$2.50$2.50$2.50$2.50
E-mail Memberships$0.63$0.63$0.63$0.63$0.63
Hourly Internet Fees$0.31$0.31$0.31$0.31$0.31
Baked Goods (based on average)$0.00$0.00$0.00$0.00$0.00
Other$0.00$0.25$0.25$0.25$0.25
      
Direct Cost of Sales     
Coffee (based on average)$8,115$8,927$9,819$10,801$11,881
Specialty Drinks (based on average)$22,824$25,106$27,617$30,378$33,416
E-mail Memberships$7,669$8,436$9,279$10,207$11,228
Hourly Internet Fees$18,679$20,547$22,601$24,862$27,348
Baked Goods (based on average)$0$0$0$0$0
Other$0$0$0$0$0
Subtotal Direct Cost of Sales$57,286$63,015$69,317$76,248$83,873

Expense Forecast

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.

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 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.

Marketing Expense Budget

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Marketing Expense Budget
 20012002200320042005
Local TV Spots$23,000$25,300$27,830$30,613$33,674
Print Materials$6,750$7,425$8,168$8,984$9,883
Other$3,300$3,630$3,993$4,392$4,832
 ------------------------------------------------------------
Total Sales and Marketing Expenses$33,050$36,355$39,991$43,990$48,389
Percent of Sales8.81%8.81%8.81%8.81%8.81%

Linking Sales and Expenses to Strategy

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.

Contribution Margin

The Contribution Margin chart and table presents a strong outlook for JavaNet's first year of operations.

  1. Sales increase an average of 10% per month in the first year.
  2. Contribution margin runs at roughly 50%.
  3. The marketing budget is consistently based on 20% of total revenue.
  4. A strong focus on local TV and radio is apparent in the expense breakdown.
  5. The marketing budget is spread evenly throughout the year.

Contribution Margin

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Contribution Margin
 20012002200320042005
Sales$375,323$412,855$454,141$499,555$549,510
Direct Cost of Sales$57,286$63,015$69,317$76,248$83,873
Other Variable Costs of Sales$3,000$3,000$3,000$3,000$3,000
 ------------------------------------------------------------
Total Cost of Sales$60,286$66,015$72,317$79,248$86,873
      
Gross Margin$315,036$346,840$381,824$420,306$462,637
Gross Margin %83.94%84.01%84.08%84.14%84.19%
      
Marketing Expense Budget20012002200320042005
Local TV Spots$23,000$25,300$27,830$30,613$33,674
Print Materials$6,750$7,425$8,168$8,984$9,883
Other$3,300$3,630$3,993$4,392$4,832
 ------------------------------------------------------------
Total Sales and Marketing Expenses$33,050$36,355$39,991$43,990$48,389
Percent of Sales8.81%8.81%8.81%8.81%8.81%
      
Contribution Margin$281,986$310,485$341,833$376,317$414,249
Contribution Margin / Sales75.13%75.20%75.27%75.33%75.39%

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