INTERNATIONAL MARKETING PLAN

REVOLUTIONARY AIR FILTERING (RAF) PRODUCT

XYZ COMPANY, SA

POB4098 PRODUCT DEVELOPMENT AND MARKETING

M (ENG) ENGINEERING MANAGEMENT

NOVEMBER 18, 2015

Prepared By: Sedge Pillay

200510164

XYZ SA Revolutionary Air Filter: An International Marketing Plan

Table of Contents

Page: 2

TABLE OF CONTENTS
INTRODUCTION: PURPOSE OF THE INTERNATIONAL MARKETING PLAN .............................................. 1
SECTION I: SITUATIONAL ANALYSIS ......................................................................................................... 2
Current Products ....................................................................................................................................................2
Product Attributes ................................................................................................................................................2
Pricing ..................................................................................................................................................................2
Place (Distribution) ..............................................................................................................................................2
Promotion .............................................................................................................................................................3
Services Offered ...................................................................................................................................................3
Current Target Market ..........................................................................................................................................3
SWOT Analysis .......................................................................................................................................................3
Strengths ...............................................................................................................................................................3
Weaknesses ..........................................................................................................................................................4
Opportunities ........................................................................................................................................................4
Threats..................................................................................................................................................................4

SECTION II: MARKETING STRATEGY AND OBJECTIVES .......................................................................... 5

Marketing Strategy .................................................................................................................................................5
XYZ Penetration into Key Markets ......................................................................................................................5
Partnerships and Alliances Supporting Sales, Marketing, and Service with Outside Support ..............................5
Financial Objectives ...............................................................................................................................................6
Marketing Objectives .............................................................................................................................................6

SECTION III: TACTICAL MARKETING PROGRAMS................................................................................... 7

Target Markets .......................................................................................................................................................7
Industry Market Potential .....................................................................................................................................7
Country Market Potential .....................................................................................................................................7
Business Environment ..........................................................................................................................................8
Additional Considerations and Findings ..............................................................................................................8
Product ....................................................................................................................................................................9
Promotion ..............................................................................................................................................................10
Advertising .........................................................................................................................................................10
Sales Promotion .................................................................................................................................................10
Personal Selling ..................................................................................................................................................11
Public Relations .................................................................................................................................................11
Pricing ....................................................................................................................................................................11
Distribution ...........................................................................................................................................................12

SECTION IV: SALES POTENTIAL, BUDGET, PERFORMANCE & IMPLEMENTATION .............................. 13

Planning and Financials Overview ......................................................................................................................13
Sales Penetration and Demand Forecasting .......................................................................................................14
Marketing Budget .................................................................................................................................................15
Labor Assumptions.............................................................................................................................................16
Non-Labor Assumptions ....................................................................................................................................17
Performance Analysis ...........................................................................................................................................18

ENDNOTES / CITATIONS ..................................................................................................................... 21

XYZ SA Revolutionary Air Filter: An International Marketing Plan

Introduction

Page: 1

INTRODUCTION: PURPOSE OF THE INTERNATIONAL MARKETING PLAN

XYZ SA has developed a revolutionary new large modular air filter for very dirty, abrasive
environments that was introduced very successfully into the South African market and, in only
five years, has virtually captured the domestic market.
Currently, there is considerable over-capacity for production, so international sales have become
very attractive. XYZ has no previous experience in international sales and the product has never
been marketed out of the country.
The purpose of this International Marketing Plan (The Plan) is to provide a realistic framework
for an international marketing effort for the Revolutionary Air Filter (RAF) product and present a
step by step marketing plan for introducing and anchoring this air filter to make it a most
successful brand.

XYZ SA Revolutionary Air Filter: An International Marketing Plan

Section I: Situational Analysis

Page: 2

SECTION I: SITUATIONAL ANALYSIS

CURRENT PRODUCTS
Product Attributes
The product is a large industrial modular air filter used for very dirty and abrasive
environments.
XYZs product has all of the competitors major benefits, features, and advantages, but in
addition has the advantage that it is a low maintenance product with virtually no wear and
tear, due to a unique and internationally patented surface treatment process. It is marginally
more efficient which makes it more environment-friendly in terms of particle pollution. The
product reduces the life cycle cost over 10 years in a typical industrial application by about
35% of that of the competitor, with less maintenance, less replacements, and lower
operational costs due to continuity of the industrial process.
Pricing
XYZs product is currently priced similar to the competitors product. Our product has
advantages over the competition, so there is no reason to lower price. The Plan is an attempt
to enter new markets, so the price should not be raised.
Place (Distribution)
This product is only distributed locally (i.e., South Africa).

Currently, there is no

international distribution channel. There are four major companies that compete globally.
Our German competitor holds a 63% market share world-wide. Two similar U.S. companies
and a South Korean company each hold about a 12% global share (37% combined).

XYZ SA Revolutionary Air Filter: An International Marketing Plan

Section I: Situational Analysis

Page: 3

Promotion
Again, our product is only distributed locally, so there is no current international promotion.
The German competitor has high brand equity and is very entrenched; its brand name is
almost a generic term for this type of air filter.
Services Offered
Our German competitor has an international distribution network in place and enjoys an
extremely positive reputation for reliability and quick service. They can replace a defective
component of their product in a relatively short period of time. Their service has become a
benchmark for the industry.
CURRENT TARGET MARKET
This product is marketed by industry segments, primarily to the mining, petro-chemical,
cement, and other similar large industrial plants in related industries. XYZ has saturated the
current market in South Africa. While South Africa is the largest mining country in several
international surveys, it still represents a small fraction of world-wide reserves. Hence, the
international market potential in our core segments is huge.
SWOT ANALYSIS
Strengths

Our product has all competitors benefits, features, and advantages plus:

More efficient, hence more environment friendly

Lower Total Cost of Ownership (TCO)

Similar price with more advantages/benefits

International patent protection for a unique surface treatment process

XYZ SA Revolutionary Air Filter: An International Marketing Plan

Section I: Situational Analysis

Page: 4

Weaknesses

Market saturation locally

Lack of international presence [e.g., awareness]

Weak relationships vis--vis cultural and geo-political aspects Lack of international sales
& marketing experience

Lack of international distribution channel [e.g., support for sales, marketing, and
operations]

Lack of critical mass mid-size company [limited resources]

Opportunities

Vast global markets and market potential

Over production [capacity and inventory]

Threats

Strong, entrenched competitors

Strong competitive brand and brand name (e.g., almost a generic term for the product
from Germany)

Strong competitive support and service (e.g., German company sets the benchmark)

Potential technology/process advancement relative to our patent

XYZ SA Revolutionary Air Filter: An International Marketing Plan

Section II: Marketing Strategy and Objectives

Page: 5

SECTION II: MARKETING STRATEGY AND OBJECTIVES

MARKETING STRATEGY
The overall marketing strategy is market growth into international markets. XYZs plan is to
move pragmatically into new countries with our strong product. The strategy first identifies a
beachhead to begin our international growth and then use this foothold to gain experience, and
then expertise, in international sales and marketing. From here we plan for rapid expansion into
other markets and, eventually, world-wide.
Given our limited resources and current lack of international experience, the plan takes a twofold tact toward achieving our mission of making our air filter product successful both
domestically and internationally. It focuses on our current product, but is cognizant of the
potential for product line extension as well as new product areas. It discusses two options
concurrently:
XYZ Penetration into Key Markets
The plan first identifies target markets, in our case countries, for early XYZ entry. It then
lays out industry segments to target early and from which to engage in segment expansion.
The Plan details strategy, tactics, and financials related to XYZs own efforts to enter new
countries.
Partnerships and Alliances Supporting Sales, Marketing, and Service with Outside
Support
Given the superior features of our product and considering the existing capabilities of other
companies in international sales, marketing, and service, we explore strategic alliances with
partners in a win-win fashion. This requires developing an attractive partnership model and
considers issues related primarily to partner product positioning, co-marketing, and service
arrangements. Although discussed in The Plan, details are left to the separate International

XYZ SA Revolutionary Air Filter: An International Marketing Plan

Section II: Marketing Strategy and Objectives

Page: 6

Business Development through Alliances effort currently being reviewed by the Executive
Committee.
The Plan recognizes our relative lack of critical mass and global presence as well as the strength
of our major competitors, particularly our German competition. Therefore, it does not suggest
market dominance in the near term. At the same time, our recent success with this product in
South Africa suggests that we can be competitive and a top-tier player (i.e., top three to five)
once infrastructure is established and support mechanisms are developed in the countries we
enter.
FINANCIAL OBJECTIVES
Our mission to be a successful brand both domestically and internationally requires financial
success. The Plan is developed to achieve the following financial objectives:

Increase overall product sales by 50% within three years of product introduction outside
of South Africa

Maintain margins at or close (i.e., 85%) of current margins

Achieve market penetration levels (Rand equivalent share) at par with all but our German
competitor within three years in the countries we choose to enter ourselves

MARKETING OBJECTIVES

Become a top-tier player in the markets we enter

Achieve global recognition and brand awareness equal to all but our German competitor
within five years globally

Develop partnerships and alliances supporting our financial objectives without limiting
our overall future growth potential

Achieve service levels at or above industry benchmarks

XYZ SA Revolutionary Air Filter: An International Marketing Plan

Section III: Tactical Marketing Programs

Page: 7

SECTION III: TACTICAL MARKETING PROGRAMS

TARGET MARKETS
In determining the first markets to enter, several key factors were considered, including sizing of
key industry and industry segments, country market potential, and the business environment. As
a result of research and analysis, The Plan begins based on a recommendation to proceed with
Australia as our beachhead country for a focused product launch into international territory.
With respect to alliances and partnerships, a more opportunistic approach is applied.
Industry Market Potential
Preliminary research examined the key industries
that utilize our type of air filter product which are
mining, petro-chemical, and cement industries.
These are three large industries with significant
global revenues (see Figure 11,2,3).
Our own experience here in South Africa is that
we have limited petrochemical production based
on a lack of oil resources.

Figure 1: Revenue by Industry

In this industry, we are primarily involved in coal to oil

conversion, which is tied to coal mining. Similarly, cement, the smallest of these industries,
is based on the mining of limestone from South Africas perspective. Therefore, we looked
more closely at the Mining Industry.
Country Market Potential
In examining the mining industry, we identified the top countries in mining. Fortunately,
South Africa, with more than $2.5 trillion in mineral reserves, is the worlds richest nation by
commodity wealth, according to Citigroup,4 and will therefore remain a major factor in

XYZ SA Revolutionary Air Filter: An International Marketing Plan

Section III: Tactical Marketing Programs

Page: 8

world-wide production. As reported in Wealth Wire, South Africa was the leading mining
country followed in order by: Russia, Australia, Ukraine, and New Guinea.
Business Environment
Another important aspect
in determining where to
begin

international

expansion is the business

environment. In a recent
ranking

of

business

environment by country,
The Economist used a set
of 10 factors, or criteria
to

score

countries

forecasting them through

2012, using a 10 point

Figure 2 - Ranking of Business Environment

scale.5 These factors included: macroeconomic environment, market opportunity, policy

toward free enterprise and competition (including taxes and tariffs), and the labor market.
Additional Considerations and Findings
After preliminary determination of Australia as the first target country, potential was
confirmed with further research. Below is just a sample of finding looking into the important
mining industry and its sub-component areas6:

XYZ SA Revolutionary Air Filter: An International Marketing Plan

Section III: Tactical Marketing Programs

Page: 9

In addition, other beneficial characteristics were identified and documented:

The primary language for business communication in Australia is English, like that of
South Africa, minimizing language issues.

Australia is in close geographic proximity. This minimizes time zone differences and,
therefore, schedules and transportation. There are established, direct, and clear shipping
lanes.

Australia if generally free of corruption and government interference frequently reported

in Russia, and to a lesser degree, the Ukraine.

New Guinea, number five country potential, is close to Australia and with similar
characteristics. It is a likely second target for expansion.

PRODUCT
The Plan assumes that the base product remains unchanged, pending any legal or regulatory
requirements that need to be satisfied in new countries. A branding (or re-branding) effort is
proposed. The branding must take into account our place as a new entrant relative to the

XYZ SA Revolutionary Air Filter: An International Marketing Plan

Section III: Tactical Marketing Programs

Page: 10

established brands, particularly the German company with its brands generic usage. In branding
we have the opportunity to emphasize our environment friendly and ecological advantages (e.g. a
green product) and the low TCO. This affects name, logo, packaging, and labeling. Labels
must also conform to country standards (e.g., import/export labeling and contents).
PROMOTION
Promotion consists of four key areas: advertising, sales promotion, personal selling and public
relations. Each of these separately and in combination require a three phase approach 1) Prelaunch (advanced promotion), 2) Launch (product introduction), and 3) Post-Launch (ongoing).
The plan for Australia is designed as a template to be replicable as other countries are added to a
growing international market scope.
Advertising
XYZ is fortunate in that their current advertising agency has a global presence and experience
in international marketing. They have offices in Sydney, Melbourne, and Brisbane, and they
currently conduct business in New Guinea. Pre-Launch advertising will focus on general
awareness of XYZ in the industry and brand awareness. Effectiveness will be measured
through brand awareness surveys and other marketing research as well as the level of
inquiries.
Sales Promotion
Similar to advertising, sales promotion is designed to generate inquiries, which will be
monitored and measured. The Plan does not expect general price discounts or reductions,
however special discounts are considered to obtain charter and marquee client in the PreLaunch and early Launch phases.

XYZ SA Revolutionary Air Filter: An International Marketing Plan

Section III: Tactical Marketing Programs

Page: 11

Personal Selling
Our current sales model relies heavily on developing relationships with senior executives
within large industrial companies and large operation sites. From a functional perspective,
we achieve success by developing strong ties to Facilities Management, Procurement, and
Regulatory Affairs. In our new markets, these will need to be largely built from scratch. It
will require a significant amount of face time, and will necessitate on-site presence for
meeting, conferences, and presentations. The Plan establishes an Australian field office,
beginning with sales and marketing management and staff and then expanding into service
and field support. In the early periods, it establishes on Australian office, but may physically
include minimal office space in several locations, as appropriate.
Our sales and marketing staff will, as now, have a large compensation component based on
closed sales. In the country HQ, as a new market, additional incentives will be put in place
for introduction/contact with new prospects, RFP identification, proposal responses, and
other relationship building activities. Domestic sales staff will be incented to influence
current clients to consider and use our overseas units where feasible.
Public Relations
XYZs International Marketing Plan calls for P.R. to be handled out of our main headquarters
in South Africa to insure consistent, uniform messaging and global development of policies
and procedures. At the same time, there may be adjustments for local issues requiring
coordination with designated P.R. liaisons in individual countries.
PRICING
The intent is keep pricing the same as it is now, except translated into local currency.
Finance will address foreign exchange and cash flow issues and operations. Special pricing
will be considered for charter and marquee clients on an individual basis.

XYZ SA Revolutionary Air Filter: An International Marketing Plan

Section III: Tactical Marketing Programs

Page: 12

DISTRIBUTION
Shipping will be outsourced to appropriate shipping companies and imports/exporters. Several
vendors have been identified that provide end to end service from our South African warehouse
facilities to locations to be designated within fifty miles of major Australian cities and industrial
areas (e.g., Western Australia).

Warehousing facilities will be rented in foreign countries

dependent on product penetration and growth. We expect these to be minimal in the first year of
The Plan. Inventories will be kept low, however sufficient replacement parts will be on hand to
assure appropriate service levels.

XYZ SA Revolutionary Air Filter: An International Marketing Plan

Section IV: Sales Potential, Budget, and Performance

Page: 13

SECTION IV: SALES POTENTIAL, BUDGET, AND PERFORMANCE

PLANNING AND FINANCIALS OVERVIEW
The financials presented in this report covers a three-month pre-planning phase through the end
of this fiscal year followed by a three-year roll-out plan period beginning at the start of XYZs
next fiscal year. At a high level, Year One plans for the initial Australian product launch and
roll-out. Year Two comprises on-going Australian operations with expected penetration and
growth targets. The second half of Year Two begins planning for country two, now expected to
be New Guinea. Year Three continues Australian operations, launches in New Guinea, and plans
for three additional countries. Concurrent with the three year plan is an alliance, licensing, and
partnering effort to develop arrangements in additional areas of the world.
XYZ Air Filter Product International Marketing Plan -- High Level Gantt Chart
Q3

Q4

Y1 Q1

Y1 Q2

Y1 Q3

Y1 Q4

Y2 Q1

Y2 Q2

Y2 Q3

Y2 Q4

Y3 Q1

Y3 Q2

Y3 Q3

Y3 Q4

International Plannng
Australia
Planning
Pre-Launch
Launch
Ongoing Operations
Establish of Intn'l Division
New Guinea
Planning
Pre-Launch
Launch
Ongoing Operations
Country 3
Planning
Pre-Launch
Launch
Operations
Country 4
Planning
Pre-Launch
Launch
Operations
Country 5
Planning
Pre-Launch
Launch
Operations

>>>>>

>>>>>

>>>>>

>>>>>

>>>>>

>>>>>

>>>>>

>>>>>

XYZ SA Revolutionary Air Filter: An International Marketing Plan

Section IV: Sales Potential, Budget, and Performance

Page: 14

SALES PENETRATION AND DEMAND FORECASTING

For the International Revolutionary Air Filter (RAF) Marketing Plan, the introduction of our
current revolutionary air filter in South Africa and the three of most recent competitive products
launched in Australia were examined to understand the penetration curves upon introduction and
during the subsequent three years7. These were modeled in terms of expected market share (in
Rand) over time and with the assumption that the rate of penetration would be slower for a new
country entrant. One key input into the model was maximum penetration. The following
parameters were used:

Optimistic Assumption The Plan recognizes that our unusually successful launch of
RAF is unlikely repeatable in a new market. We capped penetration at 60% of the 63.5%
achieved here in South Africa (i.e., 38.1%).

Pessimistic Assumption The Plan assumes XYZ can be competitive in markets it enters,
and so here assumes penetration capped as a number 3 product (i.e., 22.9%).

The

model

produced

both

optimistic and pessimistic

penetration curves. Then using
actual and projected sales from
our last XYZ Annual Report8
and

our

market

sizing

intelligence about Australia (and

New Guinea), we calculated
estimated sales, again using two
key sales factors:

Optimistic Assumption XYZ achieves its projected sales levels per the South African
Annual Report, 2011.

Pessimistic Assumption XYZ achieves only 85% of its project sales levels.

XYZ SA Revolutionary Air Filter: An International Marketing Plan

Section IV: Sales Potential, Budget, and Performance

Page: 15

Finally, we applied two more factors about expected gross margins of the RAF product, based on
internal (confidential) product P/L statements:

Optimistic Assumption Gross margins are reduced by 10% from the current 23.4%
margin (i.e. 21.1%), primarily as a result of increased logistics given overseas shipments
and storage.

Pessimistic Assumption Gross margins are reduced by 25% from current levels (i.e.,
17.6%).

The table below summarizes revenue projections for the two scenarios described, above:
XYZ Air Filter Product International Marketing Plan -- RAF Sales (in Rands)
Year 1

Year 2

Year 3

Year 4

Year 5

16.3%
34,072,298
17.6%
5,996,724
Launch
6.0%
8,471,906
17.6%
1,491,055

22.3%
48,711,889
17.6%
8,573,292

23.0%
52,501,805
17.6%
9,240,318

16.3%
24,051,034
17.6%
4,232,982

22.3%
34,384,863
17.6%
6,051,736

7,487,780

12,806,274

15,292,054

26.0%
54,348,451
21.1%
11,467,523
Launch
8.0%
11,295,874
21.1%
2,383,429

37.0%
80,822,417
21.1%
17,053,530

38.1%
86,970,382
21.1%
18,350,751

26.0%
38,363,612
21.1%
8,094,722

37.0%
57,051,118
21.1%
12,037,786

13,850,952

25,148,252

30,388,536

Pessimistic
Australia
Average Period Market Share
Adjusted Sales (R)
Margin Rate
Profit (R)
New Guinea
Average Period Market Share
Adjusted Sales (R)
Margin Rate
Profit (R)

Pessimistic Profit
Optimistic
Australia
Average Period Market Share
Adjusted Sales (R)
Margin Rate
Profit (R)
New Guinea
Average Period Market Share
Adjusted Sales (R)
Margin Rate
Profit (R)

Optimistic Profit

Launch
6.0%
12,001,866
17.6%
2,112,328

2,112,328
Launch
8.0%
16,002,488
21.1%
3,376,525

3,376,525

MARKETING BUDGET
In developing the marketing budget we have included only those costs related to the planning and
establishment of foreign business operations. This includes allocated expenses from support

XYZ SA Revolutionary Air Filter: An International Marketing Plan

Section IV: Sales Potential, Budget, and Performance

Page: 16

services including executives, finance, H.R., legal and regulatory). The Plan assumes that
beginning in year three an international division will be established with its own budget,
management structure, and staff. Actual manufacturing and production costs are excluded, as are
any costs for sales and marketing that is company-wide in nature. Also excluded are contracts
for shipping vendors and product transportation (i.e., physical product transport).
The Plan assumes project financials until the creation of an International Division (InD). This
business unit will be established at the beginning of Year Three, with all non-technical functions,
particularly management, sales, client service, and marketing, moving into this budgeting
division. Six months later (two quarters) all remaining functions are shifted into InD.
The international cost budget includes both labor and non-labor costs. It makes the following
assumptions, phased in over the project plan:
Labor Assumptions

Dedicated International Development Officer.

Australia Country Manager + Administrative Assistant (Years One and Year 2), rolling
into International Division (InD) in Year Three.

New Guinea Country Manager + Administrative Assistant (Year Two), rolling into InD in
Year Three.

2 Dedicated Sales/Client Service Representatives until formation of the InD

1 IT/Office Automation/MIS Analyst.

2 growing to 4 Local Installation Support Technicians for Australia beginning in Y2 and

2 Installation Support Technicians for New Guinea in Y3.

Allocated Support Services (e.g., Finance, HR, IT, Legal), 1 FTE increasing to 4FTEs.

XYZ SA Revolutionary Air Filter: An International Marketing Plan

Section IV: Sales Potential, Budget, and Performance

Page: 17

XYZ Air Filter Product International Marketing Plan -- Staffing (FTE)

Officer/Professional Staff
Administrative Support
Sales & Marketing Reps
IT Analyst
Installation Techicians
Allocated Support Services
TOTAL FTE

Q3
1.0
1.0

1.0
3.0

Q4
Y1 Q1 Y1 Q2 Y1 Q3
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0
2.0
2.0
2.0
0.5
0.5
1.0
1.0
2.0
2.0
2.0
3.0
4.0
6.5
6.5
9.0

Y1 Q4
Y2 Q1 Y2 Q2 Y2 Q3
2.0
2.0
2.0
2.0
1.0
2.0
2.0
2.0
2.0
3.0
3.0
4.0
1.0
1.0
1.0
1.0
2.0
3.0
3.0
4.0
3.0
3.0
3.0
4.0
11.0
14.0
14.0
17.0

Y2 Q4
Y3 Q1 Y3 Q2 Y3 Q3
2.0
2.0
1.0
1.0
4.0
1.0
1.0
1.0
5.0
6.0
6.0
4.0
2.0
1.0
18.0
10.0
9.0

Y3 Q4

XYZ Air Filter Product International Marketing Plan -- Labor Costs (R)
Officer/Professional Staff
Administrative Support
Sales & Marketing Reps
IT Analyst
Installation Techicians
Allocated Support Services
Direct Salary (R)
Overhead (Benefits, Mgmt | 24%)
Total Labor Costs (R)

266,019 66,505 66,505 66,505 66,505

55,421 13,855 13,855 13,855 13,855
0
0 72,047 72,047 72,047
0
0 16,626 16,626 33,252
0
0
0
0 30,481
177,346 88,673 88,673 88,673 133,009
498,785 169,033 257,706 257,706 349,150
119,708 42,258 64,426 64,426 87,287
618,494 211,291 322,132 322,132 436,437
Pre-Plan 829,785

133,009
13,855
72,047
33,252
60,963
133,009
446,136
111,534
557,670

Year 1 1,638,371

133,009
27,710
108,070
33,252
91,444
133,009
526,495
131,624
658,119

133,009
27,710
108,070
33,252
91,444
133,009
526,495
131,624
658,119

133,009
27,710
144,093
33,252
121,925
177,346
637,337
159,334
796,671

133,009
27,710
144,093
0
0
33,252 33,252 33,252
152,407 182,888 182,888
177,346 88,673 44,336
667,818 304,813 260,477
166,954 76,203 65,119
834,772 381,016 325,596

Year 2 2,947,682

Year 3

706,612

Grand Total: 6,122,450

Non-Labor Assumptions

Promotion budget, office equipment, supplies, training at 50% of current Air Filter
Product Budget in Y1 and 75% in Y2

Additional promotion, office, and training budget of 50% Y2 Australian Air Filter
Product Budget in Y2

Office and warehouse rental space at current local square foot rate until creation of InD

XYZ SA Revolutionary Air Filter: An International Marketing Plan

Section IV: Sales Potential, Budget, and Performance

Page: 18

XYZ Air Filter Product International Marketing Plan -- COST BUDGET (Rx000)
Q3
LABOR EXPENSES
Direct Labor
Allocated Support Labor
Labor Overhead
Total Labor Expenses
NON-LABOR EXPENSES
Rent/Facilities
Office Equipment/Supplies
Computer Hardare & Software
T ravel & Entertainment
Marketing Research/Studies
Promotion
Advertising & Media
Collateral
Other Promotion
T OT AL PROMOT ION
Total Non-Labor Expenses

TOTAL BUDGET (Rx000)

Q4

Y1 Q1

Y1 Q2

Y1 Q3

Y1 Q4

Y2 Q1

Y2 Q2

Y2 Q3

Y2 Q4

Y3 Q1

Y3 Q2

321
177
0
499

80
89
0
169

169
89
0
258

169
89
0
258

216
133
0
349

313
133
0
446

393
133
0
527

393
133
0
527

460
177
0
637

490
177
0
668

216
89
0
305

216
44
0
261

90
14
125
40
200

90
14
25
40
100

90
23
76
60
100

135
27
63
80
200

180
18
88
60
100

180
14
25
40
50

180
32
88
80
150

180
32
38
100
50

135
14

45
9

16
200

45
9
50
40
200

80
50

40
25

0
216

100
90
75
265
609

250
90
75
415
884

750
145
100
995
1,264

2,000
200
100
2,300
2,649

2,500
300
150
2,950
3,455

2,500
200
100
2,800
3,246

2,000
120
75
2,195
2,504

1,500
200
100
1,800
2,329

2,000
300
150
2,450
2,849

1,250
150
100
1,500
1,779

1,000
25
50
1,075
1,194

715
Pre-Launch

778
1,493

1,141

1,521

2,998
Year 1

3,901
9,561

3,772

3,030

2,966
Year 2

3,517
13,286

2,083

1,455

Y3 Q3

Y3 Q4

Year 3

3,538
27,878

PERFORMANCE ANALYSIS
Given the profit and cost projections shown above, break-even analysis is presented. Note the
following caveats:

Break-even analysis was performed over a 5 year planning horizon. Given the typical
(long) lifecycle of air filter products, a flat market share is assumed in Year 4 and Year 5.
Our patent protection runs well beyond the analysis time horizon.

The analysis includes launches in Australia (Year Two) and New Guinea (Year Three). It
does not include subsequent launches, although The Plan expects additional revenue
from three more country launches in Year 4.

The analysis does NOT consider introduction of any new or disruptive technology into
the marketplace (e.g., a new competitor product or our own next generation product).

XYZ SA Revolutionary Air Filter: An International Marketing Plan

Section IV: Sales Potential, Budget, and Performance

Page: 19

XYZ Air Filter Product International Marketing Plan -- Break-Even Analysis

Year 1

Year 2

Year 3

Year 4

Year 5

Pessimistic
Profit
Cost
P/L
CUM P/L

0
1,493
(1,493)
(1,493)

2,112
9,561
(7,449)
(8,942)

7,488
13,286
(5,798)
(14,740)

12,806
3,538
9,268
(5,472)

15,292

Optimistic
Profit
Cost
P/L
CUM P/L

0
1,493
(1,493)
(1,493)

3,377
9,561
(6,184)
(7,677)

13,851
13,286
565
(7,112)

26,148
3,538
22,610
15,498

30,388

15,292
9,820

30,388
45,886

The analysis indicates a break-even point for our pessimistic scenario in Quarter Four of Year
Four. In the optimistic scenario, break-even occurs in the Third Quarter of Year Three.

With The Plan investment total of $R27.6MM, we see a pessimistic 5 year ROI of 35.5%.
Optimistically, we see a five year ROI of 163.0%. However, it should be noted that under the
optimistic scenario, we will use our excess capacity sometime in Year 5, and will need to expand

XYZ SA Revolutionary Air Filter: An International Marketing Plan

Section IV: Sales Potential, Budget, and Performance

Page: 20

production capacity or build a new facility either domestically or in another location (country).
Additional product will be needed even in the pessimistic scenario sometime in Year 6.

XYZ SA Revolutionary Air Filter: An International Marketing Plan

Endnotes / Citations

Page: 21

ENDNOTES / CITATIONS

Fritz, J. E., Lucintel Estimates, Yahoo! News, November, 2012, 2012 Yahoo! Inc, , found online at
http://news.yahoo.com/lucintel-estimates-global-cement-manufacturing-industry-reach-493-140034569.html

Prinsloo, L., SA chemicals and petrochemicals industry in focus, Creamer Medias Engineering News Online,
2009, Creamer Media Ltd., found online at http://www.engineeringnews.co.za/print-version/a-snapshot-of-thesouth-african-chemicals-and-petrochemicals-industry-2009-03-20

Stastica, Total Revenue of the Top Mining Companies, found online at

http://www.statista.com/statistics/208715/total-revenue-of-the-top-mining-companies/

The Telegraph, The Worlds richest mining countries, in a report from Citigroup, 2012, Telegraph Media Group
Limited, found online at http://www.telegraph.co.uk/finance/newsbysector/industry/mining/7826624/Worldsrichest-mining-countries.html

Economist Intelligence Unit, Outpacing America: Business Environment, The Economist, October, 2007, 2012,
The Economist Newspaper Limited, found online at http://www.economist.com/node/10050677

United States Geological Survey (USGS) Minerals Resources Program, 2009, as reported in IndexMundi, 2011,
available online at http://www.indexmundi.com/minerals/?product=aluminum&graph=production

[Made up Reference, for Illustration], Neilsen International Industrial Marketing Research, Mining Indicators and
Trends, 2012 Nielsen Media Publishing, July, 2012.

[Made up Reference, for Illustration], XYZ, SA, Annual Report to Shareholders, 2011, April, 2012, Cape Town,
SA.