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Marketing Plan Project - Evaluating a New Product Opportunity

Objective

In this project, you play the role of a marketing manager/entrepreneur whose task is to study the market and the strategy for a new product or service idea that your company is considering and develop a marketing plan. You must choose a new product, or service idea that your group is interested in. Ideally, the chosen product concept must not be a "me-too" business opportunity that copies some existing product. You are encouraged to choose a product or service that is relevant to the company or industry that one or several of the group members are interested in. It could also be a business concept that you have been considering.

Assignment Report Format

Executive Summary: This would be about a page in length which succinctly summarizes your new product idea, your segmentation, positioning, and marketing mix recommendations , and the key insights that you derived. You do not need to add implementation details. The executive summary must be kept to under one page and is not included in the word limit for the report.

Products/Services Description: This should be a brief description of the product or service and its market. You can include the value proposition; core product benefit for the target market, the relevant product attributes and features. Some of the suggested questions are:

What are the benefits of your product? Are any of these benefits offered by your competitors?

Is there anything special about your product?

Do you enjoy the favor of your customer? Alternatively, do they favor one of your competitors?

Which impacts , if any, do you expect the following factors to have on both your product and company? Social factors, Demographic factors, Economic factors, Political and legal factors, Competitive factors, Financial factors, Special interest factors: Consumer rights groups, Attitude of media

Describe each of the applicable consumer buying behavior steps in detail : Problem recognition, Information search, Evaluation of alternatives, Purchase, Post-purchase behaviour

Objectives: This is a brief statement of the ultimate business goal of the marketing plan. In addition to the ultimate goal, you might also list necessary sub-goals to achieve the ultimate goal (i.e., key targets and activities that must be accomplished to achieve the ultimate goal). These will necessarily be of a marketing nature. Furthermore, this section should list the key performance indicator(s) that will be used to measure success and the timeframe in which you plan to achieve the goals.

Segmentation, Target Market Identification and Positioning: You should conduct a segmentation analysis considering various ways to segment the market and select the optimal target market segment(s). You must consider alternative positioning platforms for your chosen product concept and choose the optimal positioning for the product. In general, two to three variables are enough to segment a market, so do not attempt to use all of them.

Further, decide which strategy for selecting target markets you will be using: Undifferentiated targeting, Concentrated targeting, Multi-segment targeting

Marketing Mix Recommendation: You must specify what the marketing mix challenges are if the product were to be launched and provide recommendations on the proposed marketing strategy . You do not necessarily need to cover every element of the marketing mix, but may focus on the ones that are most critical for your problem. This section will probably be the largest section of the plan because it is where most of the marketing recommendations are made and justified. Credit will be given to groups that are able to integrate the components in #4 and # 5 and demonstrate their interrelationship in the report. Groups will also benefit from applying the concepts and issues discussed in the class throughout the semester.

Product related decisions:

Decide whether your consumers will view it either as convenience product, a shopping product , a specialty product or an unsought product. Defend your reasoning.

Decide whether you will develop a brand for your product or whether you will offer a generic product. Defend your choice.

If you decide to develop a brand, explain which of the following branding strategies would work best for your product :

Manufacturer's brand: individual vs. family brand

Private brand: individual vs. family brand

Explain which category of new products best describes your new offering:

Decide on the product category your product belongs to and discuss at which stage in the product life cycle you would place this category and why.

Discuss the implications of the product life cycle for your product in terms of product strategy, distribution strategy, promotion strategy and pricing strategy.

Pricing related decisions:

Which pricing objective you will pursue : Profit maximization, Target return on investments, Market share (units or dollars), Sales maximization

Which pricing strategy you will follow : Price Skimming/Premium Pricing, Penetration Pricing/Discounting, Going rate pricing, Perceived Value Pricing

Which of tactics for fine tuning the base price you will choose

Distribution related decisions:

Choose which of the following distribution channels would be most adequate for your product :

Producer -> Consumers

Producer -> Retailers -> Consumers

Producer -> Distributor -> Retailers ->Consumers

Hybrid Channels

What level of distribution intensity will your product require and why?

Marketing Communication related decisions:

Define the benefits your product/company has to offer.

Based on these benefits, develop at least two advertising appeals and evaluate them in terms of desirability, exclusiveness and believability.

State which of these appeals is going to be your unique selling proposition and develop a slogan.

Decide on the executional style of your ad.

Which Consumer Sales Promotion would you execute and why?

Which Trade Sales Promotion would you implement and why?

Implementation Details - Action Steps, Financial Evaluation, Controls: here is where you will include your important action steps, your timeline for key decisions and actions, your assessment of the risks you face with backup plans to mitigate risks if/when they arise, your financial analysis that provides evidence that your plan could succeed, and a list of the metrics and key performance indicators you will monitor to determine whether your plan is working.

Time Line

The following is a suggested timeline. The only official date is when you must submit the groups and your final report.

Week 1:

Convene group and pick product idea

Conduct secondary research on product category, market, and competitive environment.

Week 2:

a. Develop Survey Questionnaire. Pre-test and refine the questionnaire on 2-3 consumers.

b. Collecting data and analyze data. Make decisions on STP and the design of product/service.

Week 3:

Make decisions on marketing mix recommendations

Write marketing plan report.

1. True or False? Briefly explain (or qualify) your answers. (a) The present value of a share of common stock is an increasing function of the future growth rate of earnings per share. 2. True or false? Briefly explain (or qualify) your answers. (a) In principle, the market price of a share of stock equals the discounted value of the stream of future earnings per share. 3. True, false or "it depends" (give a brief explanation): (a) Present value is good to value only traded assets since the discount rate comes from returns on traded assets. (b) Growth stocks should either have growing dividends or earnings. 4. True, false or "it depends" (give a brief explanation): Managers should maximize the firm's current market value, but only when maximization does not create unacceptable risks for shareholders. 5. True, false or "it depends" (give a brief explanation): The DDM (Dividend Discount Model or the DCF Valuation model) works only for firms with a dividend history. 6. True or false. Briefly explain your answer in each case. (a) Growth stocks usually have growing dividends. 7. Question 1 (40 points) True, false or "it depends"? Briefly explain or qualify your answer. (a) A company that has not made a profit since its IPO (initial public offering) cannot possibly be a growth stock. 8. True, false (give a brief explanation): (a) Firms with higher than average plow back ratios are growth companies. (b) Small stocks earn higher average returns because their returns are more volatile. 9. True or false (give a brief explanation): The price of a stock equals the present value of expected future earnings per share. 10. True or false (give a brief explanation): Within an industry, holding business risk and financial leverage constant, differences in firms' P/Es depend only on differences in rates of asset growth. Fall 2008 Page 28 of 66 11. MetaTrend Corp. earns a book rate of return (ROE) of 12%. It reinvests one-half its earnings and pays out the other half as cash dividends. The nominal cost of capital is 12%. (a) Given this ROE and dividend payout ratio, what is the growth rate of Meta- Trends earnings and dividends? (b) Assume this growth rate is expected to continue in perpetuity. What is the present value of MetaTrend shares? Assume that book value per share is $10. (c) What does your answer to (b) assume about the timing of dividend payments? Explain briefly. (d) Your calculation in (b) assumes a nominal cost of capital and a nominal growth rate. Restate the cost of capital and growth rate in real (inflation-adjusted) terms and recompute the present value of MetaTrend shares. Show that the present value does not change. (e) Suppose MetaTrend decides to pay out all its earnings as cash dividends. There- fore it does not grow. What is the change, if any, in MetaTrends stock price? Why?Question 2 (20 points) This question studies the co-existence of different currencies. Time is discrete with an infinite horizon. Each period consists of two subperiods. In the day, trade is bilateral and anonymous as in Kiyotaki and Wright (1989) (call this the KW market). At night trade takes place in a Walrasian or centralized market (call this the CM). There are two types of agents, buyers and sellers, and the measure of both is normalized to 1. The per period utility for buyers is u(q) + U(X) - H, and for sellers it is -q + U(X) - H, where q is the quantity of the day good produced by the seller and consumed by the buyer, X is consumption of the night good (the numeraire), and H is hours worked in the CM. In the CM, all agents have access to a technology that turns one unit of work into a unit of good. The functions u, U satisfy the usual assumptions; I will only spell out the most crucial ones: There exists X"* 6 (0, co) such that U'(X*) = 1, and we define the first-best quantity traded in the KW market as q' = {q : u'(q") = 1}. We will assume that there are two types of money, m, and my. There are also two types of sellers. For reasons that we will leave out of the model, Type-1 sellers, with measure o E [0, 1], do not recognize m2, thus, they accept only the local currency my. Type-2 sellers, with measure 1 6, recognize and, hence, accept my, as well as my. Hence, local currency has a liquidity advantage over the foreign one, since it is recognized by all sellers. All buyers meet a seller in the KW market, so that o is the probability with which a buyer meets a type-1 seller, and 1 - o is the probability with which she meets a type-2 seller. In any type of meeting, buyers have all the bargaining power. The rest is standard. Goods are non storable. The supply of each money is con- trolled by an individual authority, and evolves according to Mitti = (1 + (;) Mis. New money (of both types) is introduced, or withdrawn if /4; 0) in every equilibrium? If not, can you provide a condition on policy parameters that would guarantee zz > 0?A firm is considering three mutually exclusive alter- natives as part of a production improvement pro- gram. The alternatives are as follows: A B C Installed cost $10,000 $15,000 $20,000 Uniform annual benefit 1,625 1,625 1,890 Useful life, in years 10 20 20 For each alternative, the salvage value at the end of useful life is zero. At the end of 10 years, Alt. A could be replaced by another A with identical cost and benefits. (a) Construct a choice table for interest rates from 0% to 100%. (b) The MARR is 6%. If the analysis period is 20 years, which alternative should be selected