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17.06.

2013

PRJ2B

BUSINESS PLAN - GROUP 4

Authors: Tom Chapple, 382797 Katharina Hfler, 382745 Merel Jansen, 385188 Mareike Nitters, 394050 Rebecca Wichhart, 392609

Programme: International Communication Subject: Balancing the Budget, PRJ2B Coach: Pieter Swieringa Class: ICV1C Grades: Pitch 8.0, Investors 7.3

Table of Content

1. Executive Summary .......................................................................................... 3 2. Personal data of Venture Members .................................................................. 4 3. Company Description ....................................................................................... 5 4. Situation Analysis ............................................................................................. 6 5. SWOT Analysis .............................................................................................. 9 6. Financial Statements ...................................................................................... 11 6.1 6.2 6.3 6.5 6.6 6.7 Estimation of Costs...................................................................................... 11 Cash Flow ................................................................................................... 15 Net Present Value ....................................................................................... 17 Balance Sheet ............................................................................................. 18 Profit and Loss Statement ........................................................................... 20 Break-even Analysis .................................................................................... 21

8. Marketing ........................................................................................................ 22 9. Promotion Event ............................................................................................. 24

1. Executive Summary

Rain Clouds is a start- up company which has come up with the unique idea to place ten rain equipment vending machines in strategic locations in the city of Groningen, in order to protect the citizens as well as visitors from the sudden occurrence of rain. The venture stands out due to its flexible, practical and affordable product. Moreover, Rain Clouds distinguishes itself from international competitors by providing not only umbrellas in its vending machines, but various types of anti-rain equipment. Thus, the product is specifically adjusted to the needs and wants of Groningens cyclists and pedestrians. The motivation behind this business idea is the moderate and rainy weather in the Netherlands with an annual average of 130 rainy days in Groningen. The idea is not focused on a specific target group profile but rather focuses on a wide range of people. Due to the favorable price level, the product appeals to almost everyone. Via purposeful marketing strategies in the form of flyers, posters and social media, as well as promotion events it will be attempted to attract as many customers as possible, in order to be able to expand on a national scale in the near future. The founders of Rain Clouds are Tom Chapple, Katharina Hfler, Merel Jansen, Mareike Nitters and Rebecca Wichhart. Every venture member has certain responsibilities within the company in relation to existing experience and knowledge. In order to implement our business idea, an initial investment of 10.000 is required, which will be paid back after a period of 2 years. The business is expected to grow rapidly which will ensure us to continuously increase our sales. Our long-term goal is to expand our business on an international scale.

2. Personal data of Venture Members

3. Company Description The following part of the business plan will describe the company Rain Clouds. First of all, it can be said that Rain Clouds resembles a start- up business with the mission to provide affordable, practical and comfortable protection against the unpredictable occurrence of rain. When it comes to a long term outlook our vision is to completely satisfy the needs and wants of our customers in order to increase the demand for our products and to be able to expand our business on a national as well as on an international scale. The business idea is to set up vending machines that provide the inhabitants and visitors of the city Groningen with rain equipment, therefore the name of the product is Keep Dry. The Keep Dry vending machines include umbrellas, rain ponchos, rain trousers and rain bag covers. The vending machines are free-standing and can be placed in outdoor as well as indoor locations. In order to make it possible that the vending machines can be located outdoors, it is required that they are battery operated. Each vending machine has a capacity of 100 items. Hence, every vending machine can hold 25 umbrellas, 25 rain ponchos, 25 rain pants and 25 bag covers. However, the vending machines need to be re-filled several times a day. In terms of the products that are provided by the rain equipment vending machines, it can be said that all products have a neutral appearance in the color black. Furthermore, a logo of the city Groningen will be placed on all items resulting from a reached agreement with the city council, which is going to be explained more precisely later on. In order to make the products affordable for a variety of people, we guarantee a favorable price of 2,49 per item. It has to be noted, that the customers will pay 2,50 due to the fact that the one cent coin does not exist in the Netherlands. The additional one cent will be used as a donation for the rain forest. The selected locations of the vending machines are based on surveys, conducted among the society of Groningen. The most attractive locations have been determined: Stadspark, Noorderplantsoen, Grote Markt, Zernike Complex, RUG, Centraal Station, Station Noord, IKEA, UMCG, and Paddepoel Winkelcentrum. The driving factor behind this business idea resembles the fact that Groningen is a city with a moderate climate and an average of 130 rainy days in one year. Everyone has experienced the situation of being outside when it suddenly starts to rain and the umbrella or the rain jacket is at home. Especially in the Netherlands, where the most 5

used means of transport is the bike while many people are pedestrains, the sudden occurance of rain affects a great amount of people. In order to protect people from the sudden occurance of rain and avoid the resulting frustration of getting soaked by the rain, Rain Clouds invented the rain equipment vending machine Keep Dry. Since the product appeals to a large number of people, a high sales volume can be expected and future success is guaranteed.

4. Situation Analysis Within this section of the business plan the internal as well as the external environment of the Rain Clouds will be evaluated. It is highly important to understand the organization and its environment in order to successfully implement the product into the market. Therefore, the internal structure, values and standards will be represented. The company Rain Clouds wants to guarantee its customers an adequate price- quality balance and as a consequence, one main value of the company is customer satisfaction. The satisfaction of a customer goes hand in hand with the success of an idea and therefore, if the customers are satisfied and willing to keep buying our products, this aspect will be achieved. In addition, one of the organizations ambitions is to become an essential part of peoples everyday life. This means that the citizens of Groningen do not have to worry about whether to take an umbrella to work just in case it might start to rain. Rain Clouds wants to make sure that customers can rely on the service when they are in need of it. Hence, the products will constantly be available for the customers. Due to these aspects, a further ambition of the company resembles the desire to implicate efficient marketpower. In order to become a successful company, it is highly important to have a coherent company culture. Tasks among the venture members are divided according to the professional field everyone is experienced in. The management style depicts to be democratic, in order to ensure that every member of the company has the same influence on decisions. Thanks to this the variety of ideas is kept up and can lead to more innovation and new ideas. Rain Clouds distinguishes itself from other organizations due to its customer- driven strategy. Conducted surveys gave insight into the general needs, as well as the desires of possible clients and as a result, the locations for the rain equipment vending machines have been specifically oriented towards those needs. 6

Further, strengths and weaknesses need to be taken into account when pointing out the internal structure of Rain Clouds. The major strength of the company resembles the competitive advantage. There are no direct competitors in the Netherlands and even though there are competitors within other countries, such as Germany and Belgium, Rain Clouds is set apart from those competitors due to the fact that these ventures only sell umbrellas in their vending machines, whereas Rain Clouds additionally sell rain ponchos, rain pants and bag covers. This gives the company a unique position in the market while making it can be seen as an innovative one. Another strength of our product is that it is practical. We give our customers the possibility to buy rain wear whenever they need it without having to go to a store. Moreover, our customers can purchase our products 24 hours a day which provides the chance to attract customers. In addition, the product is offered for a favorable price, for a more favorable price than most stores in Groningen. As a consequence, our product is attractive and affordable for the majority of people. Certainly, this business idea also consists of weaknesses and risks which also need to be taken into account in order to implement possible improvements. First of all it can be emphasized, that the products are not of first-class quality. Nevertheless, to guarantee a favorable price, a lower quality is necessary. In general, the products exhibit a good price performance ratio. Another weakness is the fact that the products are seasonal goods, meaning that sales will vary depending on the season. To the advantage of Rain Clouds it rains during most seasons in the Netherlands. The external situation analysis gives an insight in the developments within the environment of Rain Clouds and outlines aspects that could imply radical consequences for the organization. Therefore, the meso-environment will be evaluated first. Rain Clouds wants to gain a high market growth, meaning that expansion in other cities is an ambition the company wants to achieve within the next 5 years. A positive image as well as a high awareness of the products the company is providing, depicts to be a goal and is supposed to imply a high market share and growth. As a result, on a macro- environment level new employees need to be hired in order to realize this proposition. The external environment of the company also includes the analysis of opportunities and threats. Firstly, it is important to point out that the business has a variety of opportunities to expand. To start with, the company will expand to different cities in the Netherlands in order to grow demographically and 7

to reach more customers. Moreover, there is the possibility to expand on an international scale. Regarding the product itself, it is important to mention that Rain Clouds is able to expand the business by selling the vending machines to stores and facilities such as cinemas or restaurants. As a consequence, this idea includes a variety of expansion possibilities. A further opportunity is the agreement with the city council of Groningen. The council gave the company the permission to place the vending machines anywhere in the city of Groningen. In return, the logo of the city Groningen is placed on all items, and thus the products promote the city of Groningen. The other way around, the city is going to promote the company by indicating the locations of the vending machines on maps of Groningen. Moreover, another opportunity is the agreement with a Chinese supplier who provides our company with the equipment, as well as the vending machines which are needed to realize the business idea. Due to the fact that the company obtains all products from one supplier special prices have been negotiated. In terms of threats future competitors have to be named. But, as already pointed out before, Rain Clouds will set itself apart from those competitors by providing umbrellas, rain ponchos, rain trousers and bag covers instead of simply focusing on umbrellas. In addition, another threat may be vandalism, however in the future this may be prevented by a future installation of security cameras.

5. SWOT Analysis

Strengths 1. Competetive advantage 2. Innovation 3. Practical 4. Low price

Weaknesses 1. Low quality 2. Seseonal product 3. No reputation

5. 24 hours per day available

Opportunities 1. Expansion opportunities 2. Agreement with the city 3. Good relationship to supplier

Threats 1. Future Competitors 2. Vandalism

TOWS-Matrix

Strengths-S

Weaknesses-W

1. 2. 3. 4. 5.

Competetive advantage Innovation Practical Low price 24 hours per day available

1. Low quality 2. Seasonal product 3. No reputation

O-Opportunities

SO-Strategies

WO-Strategies

1. Expansion opportunities 2. Agreement with city 3. Good relationship to supplier

1. Use competitive advantage to expand in the Netherlands (S1, O1) 2. Convince other cities of our innovative, practical and convenient product (S2, S3, O2) 3. Use good relationship with supplier to ensure low price (S4, O3)

1. Expand quickly in order to build up a reputation (W3, O1) 2. Negotiate with the supplier in order to obtain products of higher quality (W1, O3)

T-Threats

ST-Strategies

SW-Strategies

1. Future Competitors 2. Vandalism

1. Use competitive advantage and expand quickly to give future competitors no chance to establish themselves on the market (S1, T1) 2. Ensure low price in order to give competitors no chance (S4, T1)

1. Use competitive advantage to build up a reputation (S1, W3) 2. Use innovation to sell additional products: summer products such as sun glasses (S2, W2)

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6. Financial Statements 6.1 Estimation of Costs

Start-Up Costs: To start up our business, the estimation of costs represents an important factor. In our estimation of start-up costs, ten vending machines are included, which leads to costs of 8.353. Within this number the shipping costs from China as well as packaging costs are included. Moreover, we need equipment in order to start our business. Since, we would like to keep the shipping costs low, we obtain stock for the first two years. The stock includes equipment of 16.000 ponchos, 16.000 rain pants, 16.000 umbrellas and 12.000 bag covers. Since we receive all our products for 0,25 cents per item, the total equipment costs for two years account to 15.000. Moreover, the start-up costs include the deposit of a storage room, a lock for the storage room, a car to be able to refill the machines, and start-up advertisement costs. The precise numbers can be obtained from the following table: 10 Vending Machines Equipment for 2 years* Deposit Storage Room Lock Car Advertisement (flyers, posters) Total Start-Up Costs: 8.353 15.000 50 11,50 5.650 400 29.464,50 = 30.000

*Equipment: 16.000 ponchos * 0,25 = 4.000 16.000 rain pants * 0,25 = 4.000 16.000 umbrellas * 0,25 = 4.000 12.000 bag cover * 0,25 = 3.000

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Total Start Up Costs: 30.000 How Much We Will Contribute: 20.000 Start Up Financing We Require: 10.000 As already pointed out in the executive summary, an initial investment is required in order to be able to start the business. Since, the total start-up costs are 29.464,50 , approximately 30.000, we request 10.000 as an initial investment in exchange for 10% of our profit. The remaining 20.000 will be contributed by the venture members.

Monthly Operating Costs: The monthly operating costs include the rent for the storage room of 135, wages for all five venture members which account for 2.4000, batteries for the vending machines for 100, advertisement for 100, fuel for the car for 100, as well as the vending machine insurance and the car insurance for 50 each. Regarding these numbers, it has to be pointed out that the wages are comparably low, due to the fact that a start-up business is not that profitable in the beginning. Therefore the venture members have to make sacrifices.

Rent Wages (for all five venture members) Battery Advertisement Fuel Vending Machine Insurance Car Insurance Total Monthly Operating Costs:

135 2.400 100 100 100 50 50 2.935 Euro

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In order to calculate the costs of our items which are needed to cover our monthly costs, the monthly costs of 2.935 were divided by 2.180, which resembles the amount of items that we expect to sell in one month. The amount of items which are expected to be sold is based on statistics, which state that there is an average of 130 rainy days in one year. The average of 130 rainy days per year was divided by 12, to get the average of rainy days per month. The outcome was 10,8333333 and therefore 10,9 has been taken as an average of rainy days per month, while fluctuations were not taken into consideration. It is expected to sell 200 items per rainy day and therefore the following was calculated, 10,9x200 which equals 2.180 sold items per month. The price per item which is needed to cover the monthly costs istherefore 1,34633026 which is approximately 1,35.

Breakdown of Price per Item: Costs per item to cover monthly costs: Item VAT Income Tax Profit Price per item: 1,35 0,25 0,53 0,02 0,34 2,49

The price per item includes the above-mentioned factors and leads to a price per item of 2,49, with a profit for the company of 0,34.

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Return: In order to calculate how many years it takes to return the investment, firstly the profit had to be calculated. Therefore the profit per item of 0,33 was divided by 2.180 which resembles the total sales per month. Moreover, the sum was multiplied by 12 in order to get the annual profit. The annual profit accounted for 8,894.40. However, the amount of money that the company requires as a safety buffer (3950.16 per month) had to be taken off. Hence, the annual payback to the investors accounted for 4.944,24. The initial investment of 10.000 was divided by 4.944,24 so as to find out when it will be possible to pay the invested money back. The result of this calculation showed that our company will be able to pay the investors back after 2 years.
Profit per Month 0,21x2.180 = 457,8 457,8 45,78 (10% interest) = 412,02 Actual payback of investment: 412,02 Profit per Year 0,21x2.180x12 = 5.493,6 5.493,6 549,36 (10%interest) = 4.944,24 Actual payback of investment: 4.944,24

Return: 10.000 divided by 4944,24 = 2 years

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6.2 Cash Flow Simplified Cash Flow from June 2012- December 2012

June Revenues Expenses FCF Profit after Investor Payment 5428.2 4687 741.2 283.4

July 5428.2 4687 741.2 283.4

August 5428.2 4687 741.2 283.4

September 5428.2 4687 741.2 283.4

October 5428.2 4687 741.2 283.4

November 5428.2 4687 741.2 283.4

December 5428.2 4687 741.2 283.4

In order to calculate our revenues it was estimated that 200 items would be sold per rainy day. Since there are on average 10,9 rainy days in one month, 200 multiplied by 10,9 was calculated. Moreover, and multiplied this by 2,49, which is the price for each unit. The calculations for our revenues were therefore 200x10.9x2.49 and the outcome was 5428.2. The total expenses sum up to 3480 per month excluding the deducted VAT of 21% (1139.92 a month). As the FCF is the amount of cash flow available for distribution among the stakeholders, it was calculated by multiplying the profit that we get from each item, meaning 0.34 by 200, the sales on one rainy day and by 10,9, the average rainy days in one month. The calculation 0.34x200x10.9 equals 741.20. Because of the fact that the investors will get 0.21 per unit of the profit, these 0.21 have to be extracted. Thus, we calculated 0.21x200x10.9, which equals 457.80 of which 45.78 are interest (10%). This amount has been extracted from 741.20 and the result is the FCF of 283.40 and resembles the profit for the company per month. It is important to note, that the average amount of rainy days in Groningen was used while fluctuations were not taken into account. However, our actual revenues will vary in the months since the rainy days per month differ in reality.

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Simplified Cash Flow from 2012 2016


Years Revenues Expenses FCF Profit after Investor Payment 2012 65,138.4 56,244 8,894.4 3,950.16 2013 65,138.4 56,244 8,894.4 3,950.16 2014 65,138.4 56,244 8,894.4 3,950.16 2015 65,138.4 56,244 8,894.4 3,950.16 2016 65,138.4 56,244 8,894.4 3,950.16

The simplified cash flow shown above is estimated according to the fact that the business will not increase its profit in the next years. However, considering that the business will expand and create a stable customer base, the numbers of sales and therefore, the stated numbers in the cash flow will increase. But at the moment, the company is not able to predict exact future sales. As a result, the lowest estimation of numbers has been used.

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6.3 Net Present Value The net present value shows the present value of the companys future cash flow. In order to calculate the NPV the FCF per month of our company of 283.40 as well as the FCF of our company per year of 3,950.16 was used. As a required rate of return 10% was used, thus representing the discount rate, the NPV was calculated by using the following formula:

Conclusion based on the NPV

Net Present Value for June 2012-December 2012


June 283.4 July 281.07 August 278.75 September 276.46 October 274.18 November 271.93 December 269.69

Net Present Value for 2012-2016


2012 3,591.05 2013 3,264.60 2014 2,957.81 2015 2,698.01 2016 2,452.74

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Balance Sheet (Projected)


Projected as of 01.07.2012 Projected as of 01.08.2012 Projected as of 01.09.2012 Projected as of 01.10.2012 Projected as of 01.11.2012 Projected as of 01.12.2012

Keep Dry

Beginning as of 01.06.2012

6.5 Balance Sheet

Assets 462.16 14,455.00 14,917.16 8,353.00 5,650.00 0.00 14,003.00 28,920.16 28,508.14 28,096.12 27,684.10 14,003.00 14,003.00 14,003.00 0.00 0.00 0.00 8,353.00 5,650.00 8,353.00 5,650.00 8,353.00 5,650.00 595.14 13,910.00 14,505.14 728.12 13,365.00 14,093.12 861.10 12,820.00 13,681.10 994.08 12,275.00 13,269.08 8,353.00 5,650.00 0.00 14,003.00 27,272.08 1,127.06 11,730.00 12,857.06 8,353.00 5,650.00 0.00 14,003.00 26,860.06

Current Assets Cash in bank Inventory Total Current Assets

0.00 15,000.00 15,000.00

8,353.00 5,650.00

Fixed Assets Machinery & equipment Other fixed assets (LESS accumulated depreciation on all fixed assets) Total Fixed Assets (net of depreciation)

0.00

14,003.00

TOTAL Assets

29,003.00

Liabilities and Equity 0.00 0.00 0.00 9,587.98 0.00 0.00 9,587.98 9,587.98 9,175.96 0.00 9,175.96 0.00 0.00 9,175.96 0.00 8,763.94 0.00 0.00 8,763.94 8,763.94 0.00 0.00 0.00 0.00 0.00 0.00 0.00 8,351.92 0.00 0.00 8,351.92 8,351.92 0.00 0.00 0.00 7,939.90 0.00 0.00 7,939.90 7,939.90 0.00 0.00 0.00 7,527.88 0.00 0.00 7,527.88 7,527.88

Current Liabilities Other current liabilities Total Current Liabilities

0.00 0.00

Long-term Debt Bank loans payable Notes payable to stockholders LESS: Short-term portion Other long term debt Total Long-term Debt

0.00 10,000.00 0.00 0.00 10,000.00

Total Liabilities

10,000.00

Owners' Equity Invested capital Retained earnings - beginning Retained earnings - current Total Owners' Equity 19,003.00 329.18 0.00 19,332.18 28,920.16 19,003.00 329.18 0.00 19,332.18 28,508.14

19,003.00 0.00 0.00 19,003.00

19,003.00 329.18 0.00 19,332.18 28,096.12

19,003.00 329.18 0.00 19,332.18 27,684.10

19,003.00 329.18 0.00 19,332.18 27,272.08

19,003.00 329.18 0.00 19,332.18 26,860.06

Total Liabilities & Equity

29,003.00

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As the company does not own land or any other property besides the inventory, the vending machines and the car, there are no other assets besides the cash in the bank. The starting inventory is 15,000, which decreases each month by the average calculated cost of goods sold of 545. Depreciation is neither taken int o account for the vending machines nor the car. Thus, the total assets in June 2012 sum up to 29,003. The only liability the company has is the 10,000 invested by the sponsor. These 10,000 are paid back with 412,02 each month, thus decreasing the notes payable to stockholders each month by this amount. As the interest of 10% on the 10,000 is an interest, it is not shown on the balance sheet. The invested cap ital by the group is 19,0003. The remaining amount from the 20,000 was used to pay start up expenses, which are not counted as assets.

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6.6 Profit and Loss Statement

Rainy Days Income Statement For the Month June Revenue:


Gross Sales Less: VAT (21%) Net Sales Cost of Goods Sold Gross Profit (Loss) 5428.20 1139.92 4288.28 545 3743.28

Expenses:
Advertising Insurance Maintenance Rent Vehicle Expenses Wages Total Expenses Net Operating Income 100 100.00 100 135 100 2400 2935,00 808.28

Other Income:
0,00 0,00 Total Other Income 0,00 808.28 48.50 759.74

Income (Loss) before Tax


Income Tax (6%) Net Income (Loss) P&L after Taxation

This income statement shows the expected income for Rain Clouds after a month while taking all expected costs into account and expecting sales of 2.180 units per month.

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6.7 Break-even Analysis The fixed expenses for the products are the purchase price. All the other expenses are therefore indirect costs. The following table shows the break-even analysis.
p/ unit Sales/Price Direct Costs Gross Profits Indirect Costs Total Costs Net Profit 2.49 0.25 2.24 1.90 2.15 0.34 p/ month 5428.2 545 4,883.20 4,142 4687 741.20 % 100 10 76 86 14

In order to cover the monthly costs of 4,687 (include tax) 1,883 units have to be sold. Break-Even Point: Monthly Operating Costs: 4687 Price Per item: 2,49 4687 / 2,49 = 1,882.32 = 1,883 sold units in order to make profit

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8. Marketing To run a profitable business, the venture members need to be aware of the customers needs and wants. When the company Rain Clouds came up with the idea of placing a new product on the market, market research was conducted. After conducting this market research, the company discovered that there is no direct competitor in the Netherlands who provides rain equipment vending machines or umbrella vending machines. Consequently, the company automatically achieved a competitive advantage on the Dutch market. However, before launching the product on the market, it was required to find out whether there is an interest in the product. For this reason, a survey was conducted. The survey included questions in terms of the price people are willing to pay for the products, the desired locations of the vending machines, and items that should be offered. Resulting from the survey, the company Rain Clouds concluded that the product will be successful, since 80% of the respondents considered the product to be advantageous. The next question that the company had to face was which segment of the market should be targeted by marketing activities. Due to the fact that rain equipment appeals to a variety of people, this question was not difficult to answer. Especially, bicyclists and pedestrians are future customers of Rain Clouds. This includes inhabitants of the city Groningen as well as visitors of all age groups. Since the rain poncho as well as the rain trousers will be available in one size, it can be worn by people from all age groups, except small children. As a consequence of the wide range of future customers, the company will market its product by using undifferentiated marketing in order to reach all of its potential customers. After determining the overall marketing strategy, Rain Clouds planned the details of the marketing mix, which means the different kinds of choices the company had to make in the whole process of establishing the product on the market. It includes the four marketing tools: product, price, place and promotion. In terms of the marketing tool product there is to say that the product is a vending machine with a multifaceted, practical and affordable offer. All our items can be obtained for a price of 2,49. The reason behind this particular price is that this amount of money seems more appealing and attractive for customers. Since customers have to pay 2,50 one cent of every sold item will be donated in order to support the rain forest. Because of the fact that 2,49 is a 22

relatively low price, the quality of the products has to be adjusted. However, the quality/price ratio is in balance. As already pointed out before, the vending machines will be placed in strategic and from customers desired locations which are: the Stadspark, the Noorderplantsoen, the Grote Markt, the Zernike Complex, the RUG, the Centraal Station, the Station Noord, IKEA, UMCG and the Winkelcentrum Paddepoel. In order to promote the product, posters will be placed throughout the whole city of Groningen, especially before launching the product and during the first months of operating. Furthermore, flyers will be handed out to pedestrians and cyclists. These promotion activities ensure that the most important potential customers, meaning pedestrians and cyclists become aware of the product. On top of that, the company will increase awareness of the product by actively being engaged in social media marketing. Moreover, it is expected that the product will be promoted by mouth to mouth promotion. In addition, the company will go to open-air events, such as concerts and festivals which will be outlined in the following.

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9. Promotion Event In order to create awareness amongst future costumers, open-air festivals and concerts, which take place in Groningen, will create the platform for a promotional event. The company will visit these open-air events in order to provide visitors of the events with rain equipment. In order to successfully implement the promotion strategy, a careful calculation of the budget is necessary. First of all, it is important to contact the event management team of the festivals/ concerts in order to get promotion permission. Possible festivals could be the Noorderzon, and the Bevrijdings Festival. However, the actual concerts and festivals will be chosen according to the weather, since our products will be best promoted when it rains. In addition, many citizens of Groningen will be attending these festivals and as a result, promoting the Rain Clouds equipment during those concerts complies the goal of reaching a large number of possible clients. The items will be sold for the same price as in the vending machines. Moreover, promotion via print media like flyers and posters will contribute to the goal of promoting the product in an accurate way. The costs for print- media promotion are included in the start- up costs for advertisement. Furthermore, the company does not have to face additional costs in terms of products, since the start-up stock provides enough material also for promotional aims. In the following table all estimated costs for one festival/ concert promotion event are listed.

Estimated Cost for one festival/ concert promotion event:

Type of Costs Transportation (fuel) Rain Equipment Festival entree (for five people) Poster and Flyer Promotion License Staff Total Costs

Estimated Costs 50 0 150 100 100 0 400 taken from stock

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Estimated Income for one festival/ concert promotion event:

We estimate to sell 1000 items per rainy festival/concert 1000*2,49 = 2.490 Total Income: 2.490 2.490 400 2.090

Total income Total costs Total profit (or loss)

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10. Reference List

Kotler, P., Armstrong, G. (2012). Principles of Marketing. London: Pearson Education.

Van Sten-van t Hoff, J., Knapen, M. (2009). Creating a business. Houten: Noordhoff Uitgevers Groningen

Vos, M., Otte, J., Linders, P. (2003). Setting up a Strategic Communication Plan. Utrecht: Lemma Publishers.

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