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

The Water Factory is entering its first year of operation. Developing a strategic marketing plan is necessary for the business to generate sufficient recurring revenue. The company offers high-quality home filtration systems.  These systems provide the healthy, pleasant taste of filtered water for pennies on the dollar relative to bottled water. It also provides customers the convenience to fill up whenever they choose, in whatever type container they prefer.

Market Summary

The Water Factory possesses good information about the water filter market and knows a great deal about the common attributes of the preferred customers. This information will be leveraged to better understand who is served, their specific needs, and how The Water Factory can better serve them.

Market Analysis

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Market Analysis
  20032004200520062007 
Potential CustomersGrowth     CAGR
Personal contacts9%5606106657257908.98%
Other people networked8%1371481601731878.09%
Other0%000000.00%
Total8.81%6977588258989778.81%

Market Needs

The Water Factory is providing high-quality water filtration systems that are far more economical than traditional bottled water. The Water Factory will offer customers the following important benefits.

  • Personal Service: All interactions will be with the salesperson at a friendly, personal level.
  • High Quality: Only quality products will be sold. Aych is leveraging his personal contacts and he has little desire to sell them junk and ruin his goodwill.

Network marketing has seen a large amount of growth within the last ten years, due primarily to the success of Amway. Network marketing business models have always been used, however, people tend to associate them with pyramid schemes or other less reputable ventures. Amway has legitimized the industry with a popular, convenient way to shop, and a legitimate, often profitable business opportunity.

Market Growth

With the success of Amway, and to a lesser degree Shaklee, and Herblife, there has been a sharp growth in this market space. Fifteen years ago this market was growing at 3% a year. For the last five years this space has grown at 9% and generates over $9 billion in revenue.

Industry Analysis

Network marketing (NM), also known as multi-level marketing is a growing industry. The large names in the industry are Amway, Shaklee, and Herblife. Other well-known companies that participate in the space are AT&T, Proctor & Gamble, and Coca Cola.

Several years ago NM was getting a bad rap because of its association with pyramid schemes. Pyramid schemes also use multi-levels in its business, however they did not have a viable product or service. They just had levels of people paying money to become a part of the pyramid with the promise that people would be paying them to become a lower part of the pyramid.

In the NM market, personal care products and household products dominate. However, there are also other services and products that are sold including travel arrangements, insurance services, pet care supplies, phone service, etc.

SWOT Analysis

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

Strengths

  • A wide range of personal contacts.
  • Focused customer attention.
  • Quality products.

Weaknesses

  • Limited by who you know.
  • Labor intensive to make initial sales.
  • Currently a limited product line.

Opportunities

  • Multi-level business model that generates multiple revenue streams from associates.
  • Customers are typically personal contacts with trust bonds already formed.

Threats

  • Already established network of marketing organizations.
  • A change in public perception regarding network marketing organizations.

Competition

There are several different sources of competition:

  • Other network marketing companies selling water filters. There are four to seven other NM firms that also sell water filtration units. Prices can be competitive.
  • Water filters sold through traditional retailers. There are approximately 10 different manufacturers of home filtration units. These units can be competitively priced, however, there is not the option to become a sales agent and get lower purchase prices for yourself as well as a future revenue stream.
  • Office style water dispenser (typically leased). There are several companies that will lease these large stand-alone water coolers. The equipment for this solution is more expensive, since you are leasing a refrigeration unit to cool the water, and the cost per gallon is also more expensive.
  • Bottled water: There are hundreds of companies that sell bottled water with the price ranging from $1-$5 a gallon, which is significantly more expensive.
  • Soft drinks: While this is not a direct substitute for water, people drink soft drinks when they are thirsty. Besides the many negative health issues surrounding soft drink consumption, it is as pricey as bottled water.

Over the last five years the market for filtered water, typically in the form of bottled water, has exploded. Demand for filtered water has steadily grown and home water filtration units offer huge price advantages relative to bottled water alternatives.

Product Offering

The Water Factory sells Water Genie brand home water filtration system exclusively. Home water filters are used to improve the taste quality of the water, as well as to remove harmful impurities in the water. The Water Factory will sell three different models:

  1. The Carafe: This model looks like a large water pitcher. When you fill up the pitcher the water passes through a filter, cleansing the water. When you pour the pitcher only the filtered water comes out. The price per gallon of water is 26 cents.

  2. The Faucet Mount: This model looks like a large bulb that mounts on the end of the water faucet. When you desire filtered water, you rotate the filter toward you and filtered water comes out of a small hole. When you want unfiltered water to pass through, you rotate the filter away from you and unfiltered water comes out of a large hole. The price per gallon of filtered water is 12 cents.

  3. The Counter Mount: This model is a 12 inch tall cylinder that resides on the counter, up to 14 inches away from the sink. There is a button near where the water exits the faucet that you push to allow filtered water to pass through. The price per gallon of filtered is six cents.

Keys to Success

The keys to success are:

  • Building trust relationships.
  • Professionalism.
  • Developing sufficient recurring revenue.

Critical Issues

The Water Factory is beginning its first year of operation. The critical issue that it faces is to generate enough multi-level business so revenues are earned even when Aych is not out actively searching to make sales. With insufficient multi-level business, Aych will struggle to earn enough money.

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