MAC N CHERRY 2011

MARKETING PLAN FOR THE NEXT FOUR QUARTERS

ANURAG SHARMA CHAKSHU KAPOOR MRINAL MATHUR PRANAY SHARMA SAMHITA MP

12/17/2011

CONTENTS
EXECUTIVE SUMMARY:............................................................................................................................................. 3 COMPANY DESCRIPTION: ........................................................................................................................................ 6 STRATEGIC FOCUS AND PLAN: ............................................................................................................................. 7 MISSION: ...................................................................................................................................................................... 7 VISION: ......................................................................................................................................................................... 7 GOALS: .......................................................................................................................................................................... 7 SITUATIONAL ANALYSIS.......................................................................................................................................... 9 SWOT ANALYSIS:..................................................................................................................................................... 9 INDUSTRY ANALYSIS: ........................................................................................................................................... 9 COMPETITIOR IN THE MICROCOMPUTER MARKET: ........................................................................... 9 COMPANY ANALYSIS:......................................................................................................................................... 11 CUSTOMER ANALYSIS: ...................................................................................................................................... 12 PRODUCT-MARKET FOCUS .................................................................................................................................. 14 MARKETING AND PRODUCT OBJECTIVES: ............................................................................................. 14 TARGET MARKETS .............................................................................................................................................. 14 CUSTOMER VALUE PROPOSTION ................................................................................................................ 15 MARKETING PROGRAM ......................................................................................................................................... 15 PRODUCT STRATEGY ......................................................................................................................................... 15 PRICE STRATEGY ................................................................................................................................................. 15 PROMOTION STRATEGY: ................................................................................................................................. 16 DISTRIBUTION STRATEGY:............................................................................................................................. 17 FINANCIAL DATA AND PROJECTIONS ............................................................................................................ 17 PAST SALES REVENUES:................................................................................................................................... 17 PROJECTIONS:........................................................................................................................................................ 19 APPENDIX: .................................................................................................................................................................... 20

EXECUTIVE SUMMARY:
A large international electronics firm Mac n Cherry decided to enter the microcomputer business. It formed a new PC Marketing Division to pursue this business opportunity and to manage it; Mr. Pranay Sharma was appointed CEO, Ms. Chakshu Kapoor- Vice President Brand Management, Ms. Samhita MP- Vice President Finance, Mr. Anurag Sharma- Vice President Advertisement and Mr. Mrinal Mathur Vice President Sales. Funds to manage the business were provided by the Corporate Headquarters every quarter. In Quarter 1; $500,000 was infused into the division. These funds were used to purchase a market survey report which helped to familiarize us with the various segments in our market place. In Quarter 2; another $500, 000 was transferred from the Headquarters to carry on operations. The following were the decisions that had to be taken in the second quarter: 1) Review the market research report and select two segments to target, 2) Develop an initial marketing strategy, 3) Open one or two sales offices for future sales, and 4) Design one or two brands to appeal to each target segment.

Based on the research report, we selected the Work Horse and Traveler segments as our two primary target segments. To cater to these segments, the Brand development division designed two brands-MnC101 and Pocket MnC. Mac n Cherry introduced its first line of desktops MnC 101, meant for the Work Horse segment in New York and London. Simultaneously a rugged portable computer was launched for the Traveler segment (Pocket MnC 101) in our London and New York offices. In Quarter 3, another $500,000 was infused into the business using which the following tactical decisions had to be made. 1) hire a sales force, 2) open new sales offices for quarter 4 3) set the selling price of each brand 4) design an advertisement for each brand 5) schedule the ads in the local media in each city with a sales office, and 6) purchase market research for the locations we were already operating in or those which we planned to open sales offices in later. An End User Feedback report and Competitive Benchmark report was purchased for United States and Europe. 4 sales people each were hired in New York and London offices. This quarter was a test marketing phase in which the company estimated a demand of 500 units for both of their products and a sale of 101 units was made.

In Quarter 4, an additional $500,000 was infused into the business and with the unused finances from previous quarters; we had a total capital of $13, 72,000. The funds were efficiently deployed to hire new sales force, place advertisements, open new sales offices and design new brands. In this quarter, Mac n Cherry s market share saw a huge jump from 8% in the test marketing phase to 25%. The total demand in Quarter 4 was 1454 for Mac n Cherry s brands. For Quarters 5-8, we plan to adopt an aggressively disruptive marketing strategy which will help us capture more market share through increased sales with the help of the final influx of $50, 00,000 capital which has been received from Corporate Headquarters. This marketing plan outlines how Mac n Cherry plans to extend its geographic coverage from 3 markets to 15 or more by the end of Quarter 8.

COMPANY DESCRIPTION:
A large international electronics firm Mac n Cherry decided to enter the microcomputer business. It formed a new PC Marketing Division to pursue this business opportunity and to manage it; Mr. Pranay Sharma was appointed CEO, Ms. Chakshu Kapoor- Vice President Brand Management, Ms. Samhita MP- Vice President Finance, Mr. Anurag Sharma- Vice President Advertisement and Mr. Mrinal Mathur- Vice President Sales. With 5 other competitors in the microcomputer business, Mac n Cherry decided to initially target the Work Horse and Traveler segment with a desktop and a rugged portable computer designed to meet their needs. These were priced based on the differential pricing strategy as per the willingness of the customers to pay in each segment and market demand for each brand. The MnC 101 and Pocket MnC brands, meant for the Work Horse and Traveler segments respectively sold 101 units in total in the test market phase. In Quarter 4, a new brand Novo Mac was designed to cater to the Innovators segment along with the earlier two brands. A new sales office was set up in Berlin where the Novo Mac was introduced and it received the best reviews from that office.

The sales in Quarter 4 jumped to 1454 units which allowed Mac n Cherry to capture a total market share of 25%. In the forthcoming quarters, Mac n Cherry hopes to see more than 100% increase in its per unit sales, thereby increasing market share.

STRATEGIC FOCUS AND PLAN:

MISSION:
To deliver to the global markets our high performing and innovative systems at competitive prices.

VISION:
To be the leading organization in the PC market delivering high quality products with sustainable innovations

GOALS:
For the next four quarters, Mac n Cherry seeks to achieve the following goals: NON FINANCIAL GOALS: To design the highest quality brands pertaining to the segment that is being targeted. y y y y To achieve extensive global coverage i.e. at least 3 sales offices in each continent. To add at least 2 new products to the existing brands every quarter. To be among the top players in the market in terms of market share. To increase the overall marketing effectiveness of all our brands.

FINANCIAL GOALS: To turn around the cumulative net loss that we have of $802,553 in quarter 4 to a profitable figure within the next quarter. y y To achieve a return on investment of 80% or more in the coming quarters. To increase market share of individual brands by at least 50% from where they stand now. CORE COMPETENCIES AND SUSTAINABLE COMPETITIVE ADVANTAGE: In terms of core competencies, Mac n Cherry finds its strength in innovating and providing the best quality product matching the needs of the target segment. We will continue to do so with the help of the market research report and also based on the competitive benchmark report. We also plan to make efficient use of the advertising media to increase sales by making use of our effective marketing and distribution channels that maintain the company s quality standards. To translate these core competencies into sustainable competitive advantage, the company plans to expand and hire an efficient sales force in each location and to build and maintain relationships and alliances with distributors and retailers with the help of our promotion tools so as to maintain the high standards of the brands we design keeping in mind our customer base.

SITUATIONAL ANALYSIS
SWOT ANALYSIS:
Internal Factors Management Strengths Members of the management belong to varied backgrounds High quality Innovative High Performance Competitive Pricing Distribution in three markets with excellent acceptance Weakness Small size can restrict options Fresher & Inexperienced management

y y

Offerings

Marketing

y y y y y

Personnel

y y

Good work force, though small Little turnover

Less marketing activities ( Promotions, POD s, Ad airtimes, etc) due to budget constraints Less in number

External Factors Consumer / Social

Technological

Threats Each competitor has an equal chance of getting the market share. Technological breakthrough Competitor s better allows us to produce better technology product for the market.

Opportunities Market share is infinite.

INDUSTRY ANALYSIS: COMPETITIOR IN THE MICROCOMPUTER MARKET:

There are six companies running in the market namely World Comp Systems, Techno-core computers, Seguro, Orange, Techiedge and Mac & Cherry.

Till Quarter 5 World com is market leader with 32.8 % of market share and Mac & Cherry chasing them with 25.8 % of market share and third is Seguro with 15% market share.

Market Demand
Company CostCutter Techno-Core Computers Orange TechiEdge World-Comp Systems Mac n Cherry SEGURO Total 0 0 5 590 47 390 1,032 Innovators 51 141 139 363 405 54 1,153 Mercedes 0 18 37 211 97 1 364 Work Horse 26 106 199 678 410 398 1,817 Traveler 256 137 357 3 495 0 1,248 333 402 737 1,845 1,454 843 5,614 Total Demand

Company Cost Cutter Innovators Mercedes Work Horse Traveler Techno-Core Computers Orange TechiEdge World-Comp Systems Mac n Cherry SEGURO 0% 0% 0.4% 57.1% 4.5% 37.7% 4.4% 12.2% 12% 31.4% 35.1% 4.6% 0% 4.9% 10.1% 57.9% 26.6% 0.2% 1.4% 5.8% 10.9% 37.3% 22.5% 21.9% 20.5% 10.9% 28.6% 0.2% 39.6% 0%

Total Market Share

5.9% 7.1% 13.1% 32.8% 25.8% 15%

These are the results till quarter 5 .By observing above tables we can say that World Comp is performing well but the demand of the products of Mac & Cherry in their targeted segment is comparatively high. In innovator segment we have sold 405 units in workhorse

segment 410 and in travelers 495. Hence proving that in the targeted segments, our products have been a hit.

An analysis of the total market share enjoyed by all the players in the market show that Mac n Cherry does have a substantial presence in the market.

COMPANY ANALYSIS:
The management of Mac & Cherry consists of 5 manager s belonging to varied background. These managers have been given different roles & responsibilities. This helps the management to take decisions by taking into consideration all the aspects. The product offerings of the company are catered to the 3 segments that are targeted, namely, Innovators Novo Mac 101, Work Horse M n C 101, Travelers Pocket M n C

101. These products are made by keeping into mind the usage habits of the customers. These products are of high quality, Innovative, High Performance, & with Competitive Pricing. These products are sold in three markets, namely, London, New York & Berlin. All the products are well accepted in all the 3 markets. The Continuing efforts to provide innovative products & ensure quality in delivered products suffice the mission & vision of the company. Breakthrough innovations lead to Economies of scale & help achieve cost budget.

CUSTOMER ANALYSIS:
In terms of customer analysis, this section describes, the characteristics of customers expected to buy our product. Our primary targets being the Work Horse and traveler segments, we have designed products to suit their requirements based on the market research report.

Work Horse: This segment of our customers comprises of the working class people who require an easy to use computer with fast computer to computer links. They also look for an established brand name and an easily available brand.

Given above are the top eight needs of the work horse segment in terms of needs and usage of the product. Traveler: The traveler segment requires an easy to use rugged portable design which can send and receive e-mails on the road, is easy on the eyes and has a quick processor. Given below are the top eight needs of the traveler segment in terms of needs and usage of the product.

PRODUCT-MARKET FOCUS
This section describes the next five quarter marketing and product objective for Mac n Cherry and the target market.

MARKETING AND PRODUCT OBJECTIVES:

 Current Market: Mac n Cherry will grow its current market by expanding its brand. Initially we are serving only Workhorse and Traveler segment but later on we moved to the Innovator segment for the expansion of our brand. We already increase our distribution channel by opening sales offices in 3 different locations.  New Market: By the end of 8th quarter we will expand our market in 12 to 15 different locations across all continents.  New Product: By the end of we will add products for Innovator, Workhorse, Traveler and Mercedes segment across all continents.

TARGET MARKETS
Initially we targeted the Workhorse and the Traveler segment. By the 8th quarter we are planning to target two more segment i: e Innovator and the Mercedes segment. Both

segments are different in their needs. Innovator are always search for a system that deliver high performance and able to tailor to individual needs. Mercedes wants high performance system that can be tailor to run special applications.

CUSTOMER VALUE PROPOSTION

Mac n Cherry offers high performing and innovative systems at competitive prices those are available easily and have after sale service.

MARKETING PROGRAM
The four marketing mix elements of Mac n Cherry are given below.

PRODUCT STRATEGY
 Product Lines: Mac n Cherry systems available in 101 series. The three different systems are MnC 101, Novo Mac 101, and Pocket MnC 101.We are Planning to introduce more products with different feature under the same series.  Unique Product Quality: Mac n Cherry offers products of unique quality. The designing of the system is based on the needs of the different target segments. The components we use for each system are of unusually high quality.

PRICE STRATEGY
We follow differential pricing. We offer different prices for different customers. Our prices vary in different locations.

UNITED STATES Retail Price 3,199 3,299 3,499 Price Rebate 400 300 100

EUROPE Brand MnC 101 Pocket MnC101 Novo Mac 101 Retail Price 3,199 3,299 3,499 Price Rebate 400 300 200

Brand MnC 101 Pocket MnC101 Novo Mac 101

 Point of display: This is in order to increase the visibility of product. For each product in every location $200 was spent.

PROMOTION STRATEGY:
Key promotion feature of the Mac n cherry are:  Price Rebates: To generate a repeat purchase and to increase the loyalty of our customer we are giving price rebate on our products. UNITED STATES Brand MnC 101 Pocket MnC101 Novo Mac 101 Price Rebate 400 300 100 EUROPE Brand MnC 101 Pocket MnC101 Novo Mac 101 Price Rebate 400 300 200

 Advertising : Advertisements pertaining to each product were placed in local inserts in all cities that the product was being offered in.

DISTRIBUTION STRATEGY: Mac n cherry distributed in its current market through

retailer. We are planning to open new sales offices in different location. By the end of 8th quarter we are planning to open new sales offices across different locations.

FINANCIAL DATA AND PROJECTIONS

PAST SALES REVENUES:
Quarter 3 shows the results based on a test market run. The same are shown below:

Sales - Total
Brand MnC 100 Pocket MnC Total Number of Units Sold 61 40 101 Sales Revenue 186,050 129,600 315,650 Rebates 0 0 0 Cost of Goods Sold 133,798 100,896 234,694 Gross Margin 52,252 28,704 80,956

Based on the sales made, Mac n Cherry s market share was 8% as can be seen from the chart below.

The sales of Quarter 4 are shown below.

Sales - Total
Brand MnC 101 Pocket MnC101 Novo Mac 101 Total Number of Units Sold Sales Revenue Rebates Cost of Goods Sold Gross Margin 419 487 548 1,454 1,340,381 1,606,613 1,917,452 83,800 73,050 43,000 826,633 922,775 1,360,396 3,109,804 429,948 610,788 514,056 1,554,792

4,864,446 199,850

The division profitability however can be better understood from the figure given below. The data given below is of all the previous quarters.

Profitability of Marketing Division

Quarter 1 Revenues Rebates Cost of goods sold Gross margin Sales office leases Sales force expense Brand promotions Special programs Ad creation/revision Point of Purchase Display expenses Advertising expenses Engineering cost for new brands Market research Operating expenses Operating profit Research and development costs Set up costs for new sales offices Net profit for division 0 0 0 0 0 0 0 0 0 0 0 0 88,000 88,000 -88,000 0 0 -88,000 Quarter 2 0 0 0 0 0 0 0 0 0 0 0 120,000 0 120,000 -120,000 0 300,000 -420,000 Quarter 3 315,650 0 234,694 80,956 170,000 260,138 0 0 60,000 800 38,000 0 40,000 568,938 -487,982 0 120,000 -607,982 Quarter 4 4,864,446 199,850 3,109,804 1,554,792 228,000 585,664 0 0 90,000 1,800 115,899 180,000 40,000 1,241,363 313,429 0 0 313,429

PROJECTIONS:
The next four quarters projections have been tabulated below. ACTUAL PROJECTIONS Quarter 3 Quarter 4 Quarter 5 Quarter 6 Quarter 7 Quarter 8 101 1454 2797 15000 22000 30000 315,650 4,864,446 8950400 48000000 70400000 96000000 0 199,850 447520 2400000 3520000 4800000 234,694 3,109,804 5817760 31200000 45760000 62400000 80,956 1554792 2685120 14400000 21120000 28800000 170000 228000 228000 1208000 2188000 3168000 260138 585664 1185664 2185664 3185664 4185664 98800 0 40000 -487,982 0 120000 -607,982 207699 180000 40000 313429 0 0 313,429 485400 240000 533940 120000 587334 120000 646067.4 180000

PARTICULARS Total Sales (units) Sales (In $) Rebate COGS Gross Margin Sales office lease Sales force expense Advertisement expenses Engineering costs for new brands Market Research Expenses Operating Profit Research & Development Costs Set up costs for new sales offices Net Profit for the division

100000 160000 446056 10192396 2000000 938000 -2491944 0 330000 9862396

220000 280000 14819002 20340269 0 380000 0 0

14439002 20340269

The above calculations have been done taking some assumptions. They are: 1. Total sales include sales of all brands existing and those yet to be designed in all markets (existing and those yet to be opened) and for all segments (existing and those yet to be opened). 2. Average selling price has been taken as $3200. 3. Rebate is taken as 5% of sales. 4. Cost of goods sold is estimated at 65% of sales.

5. Advertisement expenses increase @ 10% per quarter. 6. Research and Development cost is a one-time expense and hence will be expensed only in the quarter that it is incurred in.

APPENDIX:
THE MARKET SURVEY PLAN PURCHASED IN QUARTER 1

Market Survey Sampling Plan

Buy Size No Plan 100 200 300 400 500 600 700 800 900 X 1000 13% 9.2% 7.5% 6.5% 5.8% 5.3% 4.9% 4.6% 4.3% 4.1% 132 115 107 102 98 95 93 91 90 88 13,200 23,000 32,100 40,800 49,000 57,000 65,100 72,800 81,000 88,000 Error Unit Cost Total Cost

BRANDS DESIGNED IN QUARTER 2

MnC 100 [new] Base components Standard desktop design Rugged portable design Digital video disk (DVD) read/write drive High capacity hard drive Office software-word, spreadsheets Accounting/bookkeeping software Business graphics software Presentation software Database software Statistical analysis software X X X X X X X X X X X X X X X X X X X Pocket MnC [new] X

Engineering graphics software Manufacturing control software 17" monitor for desktop 13" monitor for portable Mid-range processor Standard keyboard Antivirus software Expansion slots for adding new devices Standard network/Internet connection Standard battery for portable Windows for professionals Opening Sales Offices: New York, London X X X X X X X X

X X X X X X X X X X

QUARTER 3
Opening Sales Offices: Berlin Sales People:

United States
Quarterly Training Costs 3,000 Annual Salary Total Sales People 2,000 3,000 4,000 2,000 3,000

City

Service Support 4 1

Cost Cutter 0

Innovators Mercedes Work Horse Traveler 0 0 2 1

New York

100,000

Europe
Quarterly Training Costs 3,000 Annual Salary 85,000 Total Sales People 4 2,000 3,000 4,000 2,000 3,000

City

Service Support 1

Cost Cutter 0

Innovators Mercedes Work Horse Traveler 0 0 2 1

London

Price and Priority:

United States
Brand MnC 100 Pocket MnC Available for Sale Retail Price Price Rebate Sales Priority X X 3,050 3,200 0 0 1 2 Point of Purchase Display X X

Europe
Brand MnC 100 Pocket MnC Available for Sale Retail Price Price Rebate Sales Priority X X 3,050 3,300 0 0 1 2 Point of Purchase Display X X

Local Ad Placement:

United States
Number of times ad should run in market City New York Cost 12,000 i-solutions 4 u 1 Pocket Me 1

Europe
Number of times ad should run in market City London Cost 7,000 i-solutions 4 u 1 Pocket Me 1

QUARTER 4 Sales People:

United States
Quarterly Training Costs 3,000 Annual Salary Total Sales People 2,000 3,000 4,000 2,000 3,000

City

Service Support 8 1

Cost Cutter 0

Innovators Mercedes Work Horse Traveler 2 0 3 2

New York

100,000

Europe
Quarterly Training Costs 3,000 Annual Salary 75,000 85,000 Total Sales People 4 8 2,000 3,000 4,000 2,000 3,000

City

Service Support 1 1

CostCutter Innovators Mercedes Work Horse Traveler 0 0 3 1 0 0 0 3 0 3

Berlin London

Price and Priority:

United States
Brand MnC 101 Pocket MnC101 Novo Mac 101 Available for Sale Retail Price Price Rebate Sales Priority Point of Purchase Display X X X 3,199 3,299 3,499 400 300 100 1 2 3 X X X

Europe
Brand MnC 101 Pocket MnC101 Novo Mac 101 Available for Sale Retail Price Price Rebate Sales Priority Point of Purchase Display X X X 3,199 3,299 3,499 400 300 200 1 2 3 X X X

Local Ad Placement:

United States
Number of times ad should run in market City New York Cost 12,000 i-solutions 4 u 2 Pocket Me 3 What is Next 1

Europe
Number of times ad should run in market City Berlin London Cost 6,000 7,000 i-solutions 4 u 0 2 Pocket Me 0 2 What is Next 3 1