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ProTech, Inc. Running head: Marketplace Live Simulation

Marketplace Live Simulation Executive Summary ProTech ERAU Student MGMT 311 Principles of Marketing Embry-Riddle Aeronautical University

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ProTech, Inc. Executive Summary Executive Team Overall leadership tasks include setting objectives, organizing and assigning work, managing schedules and meetings, monitoring overall performance (balanced scorecard) and managing the team to lead the industry. Other tasks performed are: brand management (delivery of customer needs through brand design and pricing), advertising (ad copy design and media placement), sales management (distribution (location and timing of sales offices), sales force management (number and targeting), marketing research (analysis of market data), and finance (financial performance and profit analysis). Mission Statement At ProTech , our mission is to help people and businesses throughout the world reach their full potential by striving to lead in the invention, development and manufacture of the industry’s most advanced computer systems. Protech will conduct research and development to continually provide customers with the latest information technology products maintaining high product quality and reasonable prices.

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ProTech, Inc. Products ProTech manufactures and markets computers to the business segment. One line of products will be practical, portable, featuring enhanced networking and office applications at a reasonable price. Another product line will feature more basic applications, be easy and fun to use, sold at modest prices. Market Estimate The total market potential worldwide is estimated at $60 million in the next 12 months. Worldwide the potential demand is 11000. The microcomputer industry is in its infancy stages, it will take a few quarters for customers to warm up to the industry. In the early stages of the market, the quality and quantity of the marketing will be less than ideal. ProTech will be seeking $30 million during the next 12 months and will reinvest profits to continue to be on the forefront of computer industry and retain a large market share.

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ProTech, Inc. Description of Business and Industry Marketing Strategy ProTech will use differentiated or segmented marketing strategy. The firm will target several target segments, and will design and market separate products for each keeping each segments’ needs and wants in mind. By offering product variations to separate segments ProTech hopes to achieve higher sales and stronger position in the market as opposed to using undifferentiated strategy. A differentiated marketing strategy also means higher cost of doing business. The increased sales projections outweigh the drawbacks of increased cost of marketing. Products, Customers, Locations ProTech will sell state of the art computers through company-owned sales offices in 4 major metropolitan markets around the world; New York, Paris, Toronto and Tokyo. We will be entering these geographical areas in the order stated above. Your target customers will be in the business sector. There are three market segments within this sector to serve in the PC market. They are referred to as the Mercedes, Workhorse, and Traveler segments. Company Objectives The company’s objective is to be the best competitor entering the microcomputer marketplace and to achieve a 50 % market share worldwide while meeting or exceeding corporate profit expectation.

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ProTech, Inc. Company History ProTech the Personal Computer division of a large international electronics firm was established during the third quarter of 2007. Headquartered in New York City and currently operating satellite offices in Paris, Toronto, and Tokyo. During the last six quarters the company has achieved strong market leadership in the industry earning customers’ confidence with valued-added information technology products and unsurpassed support service. Industry Overview Status and Prospects Overall sales revenue has continued to increase over the last 6 quarters, as well as the cumulative net profit. At the close of the sixth quarter overall sales increased to $33,043,587. The net profit is currently at $24,833,861. The company dominated the landscape holding 45% of the total market share. The company’s brands are high in demand in all geographical areas and targeted market segments. As long as ProTech stays true to its value-proposition demand and sales will steadily grow. SWOT Analysis A complete analysis of the company’s strengths, weaknesses, opportunities, and threats were conducted. Strengths: The company’s strengths are its marketing effectiveness, market performance, its sales force, good-value pricing and product line differentiation. Weaknesses: One area of weakness ProTech needs to improve on is financial performance. The cumulative balanced scorecard indicates a rate of 62.28 in financial performance. While this rate is above the

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ProTech, Inc. average of 42.39 it has room for improvement to move toward the maximum measured rate of 123.36 in the marketplace. Opportunities: As the personal computer market is still in just emerging tremendous opportunities lie ahead. ProTech already dominates the market with a 45% total market share; holding 65 % of the market share in the Workhorse and 47 % of Traveler segments. Building on this will guarantee ProTech will remain the industry leader in these two segments. Threats: being the market leader in the Workhorse and Traveler segments, competitors will attempt to take for themselves a larger piece of the market share. They may resort to imitating ProTech brands, published ads, and may even offer lower prices. ProTech needs to stay ahead of the competition to mitigate these threats. Sales Offices ProTech opened four sales offices in the last 6 quarters. The New York Office opened first, offering a salary of $100000. Second we opened in Paris offering $80000. Third we opened in Toronto offering an annual salary of $60000, and last we opened a sales office on Tokyo at $120000. Each location opened with 4 sales and 1 service support personnel. The guaranteed salaries helped maintain an effective and efficient sales team. Comparatively, ProTech sales team sold 2-3 times more computers than competitors while the size of the sales force is the same or less than competitors’.

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ProTech, Inc. Market Opportunity Analysis Market Profile There are three market segments to serve in the PC market. They are referred to as the Mercedes, Workhorse, and Traveler segments. Each segment has different needs and wants and requires a different market strategy to appeal to it. The overall segment unit demand for the 12 months forecast is: Workhorse at 25,471 units; Mercedes at 14,877; and Traveler at 11,399. Target Segments The initial target market selected was the Traveler segment. During the fourth quarter the Workhorse segment was added. The Traveler segment customers are executives and sales people who travel a lot and want a practical computer to use on the road at fair prices. The Traveler segment was selected because it presents a large niche market for specialized computers. The Workhorse segment is the largest group of customers. They want an easy to use PC for office workers at modest prices. This segment was selected due to its huge market potential if segment needs are met correctly. Forecast and Projections In the future quarters the company needs to show growth while maintaining or increasing profitability, demand, and market share. Judging from the last two quarters’ division sales and profitability statements, the company can expect a 10% growth rate. The industry will become saturated with competitors and ProTech needs to stay ahead of the competition in all aspects of the marketing

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ProTech, Inc. mix. Products will need continuous improvement through research and development to keep demand for the company’s brands high. Customer Profile Customer profiles can be broken down by targeted market segments. ProTech targeted the Traveler and Workhorse segments during the last 6 quarters of operation. The Traveler segment consists of business executives and sales people who travel often. These customers are looking for a personal computer that is rugged and portable, can link with other computers and features office applications. Traveler customers are willing to pay up to $3200 for such specialized unit; but value performance ahead of price. The Traveler segment is the third largest in potential market demand at 11,399. Mobile Pro and Mobile Pro 1200 brands are very popular with this segment. The two brands reached number 1 and number 2 placements in brand judgment and a score of 100 in price judgment capturing 47% of market share within the segment. The Workhorse segment is the largest in market potential at 25,471. This segment looks for an easy to use computer at a low price of up to $2500 with office applications and after sale service and support. PT1500 and PT 1700 brands designed for this segment are doing well, also reaching number 1 and number 2 placements with customers and 65% of the market share within the segment.

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ProTech, Inc.

Key Competitors Profile ProTech’s competitors are namely Ideal Solutions, GBC, and BN Technologies. Ideal Solutions opened its first sales office in Toronto and then Paris, targeting the Workhorse and Traveler segments. Ideal Solutions’ two brands’ current market share is 20% in the Workhorse, and 9% in the Traveler segments, combining to a 12 % overall market share. GBC targeted all three segments spreading its resources wide. GBC opened its first sales office in Tokyo then in New York. The company has a large sales force of 35 selling 6 different brands; and inserting a whopping 151 ads. GBC’s 24 % total market share breaks down within the segments as follows: Workhorse 9%, Mercedes 51%, and Traveler 23%. GBC’s success in the Mercedes segment is because they only faced one competitor: BN Technologies. BN achieved a total market share of 18%, holding 4% in Workhorse, 42% in Mercedes and 18% in the Traveler segments. Similarly to GBC, BN Technologies spread its resources wide targeting all three segments, building up a sales force of 32, and running as many as 120 ad inserts. All competitors priced their products low in order to penetrate the market. They are likely to continue to offer low prices to expand market growth and may also mirror ProTech’s products and marketing strategies.

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ProTech, Inc. Marketing Plan and Sales Tactics Target Markets The targeted markets were Traveler and Workhorse. The needs and wants of Traveler from high to low importance were: Portability, Can link with other computers, Office Applications, Low Price, Easy on eyes, After-sale service and support, Easy to use, and Fun to use. The Workhorse segment’s needs and wants ranked as follows: Easy to use, Low price, Office applications, After-sale service and support, Can link with other computers, Fun to use, Fast & powerful, and Easy on eyes. During the first quarter, ProTech decided to target the Traveler segment because it presented a highly attractive niche market. As stated in the company’s mission statement, ProTech desired to position itself as a high quality innovator and manufacturer of personal computers “to help people and businesses throughout the world reach their full potential”. The Workhorse segment was later targeted because of its tremendous market potential. ProTech will continue to concentrate on these two segments continuing to improve on product offering, placement, and price.

Product line

ProTech developed and marketed four brands during the last six quarters. MobilePro and the improved MobilePro1200 were designed to meet the needs of the Traveler segment. The brand name MobilePro was selected because it suggests the products’ benefits and qualities, it’s distinctive and easy to recognize, remember, and pronounce. MobilePro 1200 has a brand judgment of 100 and is

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ProTech, Inc. ranked as number one in the segment. The original MobilePro ranks at the second place with e brand judgment of 85. There are several attributes that help these two products stand out from the competition such as: added games, ultra slim stylish desktop design, ultra fast powerful computing and a high comfort keyboard with wrist rest. PT1500 and PT1700 (later improved and renamed as PT1710) were designed to satisfy customers in the Workhorse segment. PT stands for ProTech while the numbers represent the screen sizes of the products. These names are also easy to recognize pronounce and remember, and convey a no-nonsense brand message. PT1500 ranked as number one followed by PT1700 in the second place, achieving a brand judgment of 92 and 81 respectively. Both stayed above competitors’ products with stylish desktop designs, games, and high comfort keyboards. All four products were priced below competition. Some competitors priced their brands ending in 00. ProTech’s prices end in 99. Although in some cases the actual product price is only 1 cent less, due the psychological effect, price and value conscious buyers favored ProTech’s brands.

Research and Development New product design and development is a crucial factor in the success of the company. The microcomputer industry is fast changing. ProTech needs to continually revise product design and range due to constant developments in technology, competitors and customers changing preferences. Keeping in mind customer wants and needs and staying technologically ahead of the competition guarantees the computers will sell. In order to keep with changing customer needs ProTech needs to periodically conduct market research. Product revisions

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ProTech, Inc. and new product introductions will take place as frequently as every other quarter. Developing these new technologies adds to the cost the products but improvements will also increase sales. Pricing ProTech used a market penetration pricing strategy setting a low initial price for all brands in order to attract a large number of buyers quickly and win a large market share. The more computers the company sells, the lower the cost per product. Both market segments (Traveler and Workhorse) targeted are price sensitive, and value oriented. Competitors also set their prices relatively low. Ideal solutions’ average price was $2850 compared to ProTech’s $2824. The other two competitors’ average prices ended higher ($3967 and $3750) as they partly targeted Mercedes, a less price conscious segment. Each brand produced considerable profit. Following are the yielded profit amounts broken down by brand. The dollar amounts represent profit per unit: MobilePro $1183, MobilePro1200 $1299, PT1500 $1019 and PT1700 $1053. Promotion Historically advertising expenditures represented 2-3 % of sales. In the 6th quarter for example, $405,450 was spent on advertising and anther $60000 on ad revisions for a total of 56 ad inserts. Competitors spent 2-3 times this amount while their ads were less effective in resonating with target markets. Instead of using a percentage of sales method however, it may be more effective to use an objective and task method of promotion budgeting in order to take advantage of new opportunities and reaching specific division objectives. Each brand’s ads

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ProTech, Inc. placed in the top two in consumer ad judgment. Advertising messages stress quality products at low prices featuring applications matching each segment’s needs and wants. They also mention brand name in order to build consumer recollection, brand awareness and loyalty. Alternative methods of advertising will be evaluated, and may include outdoor, internet, direct mail, national newspapers and magazines. Rebates will remain as part of the promotional pricing especially in new areas the company sets out to penetrate.

Distribution ProTech opened sales offices in four geographical markets: New York, Paris, Toronto and Tokyo. In New York Traveler segment’s potential is 3763 and Workhorse 7194, in Paris Traveler segment’s potential is 2648 , workhorse 7751, in Toronto traveler segment’s potential is 1936, workhorse 5562 and in Tokyo traveler segment’s potential is 3052 and workhorse 4964. In each geographical area 2 sales people have been assigned to each segment and 1 person in support capacity. ProTech sales force has been very effective in selling in all areas and segments. In future quarters the company plans on increasing the sales and support force size in anticipation of increased demand. Although costs will increase, anticipated sales growth outweighs these costs. In the microcomputer industry direct selling with a dedicated sales force proves the most effective. ProTech needs to research new geographical areas to open new sales offices worldwide. Other sales channels the company may

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ProTech, Inc. consider in future quarters are selling via the Internet, developing a reseller network, or placing the products in retail stores. Financial Plan Profitability In the sixth quarter the product line of PT1500 brought the highest profit in for the company with a product profit of $5,799,769. The next highest brand’s profit was MobilePro 1200 with $4,992,192. PT1700 and MobilePro brands brought in $1,594,503 and $1,021,185 respectively. PT1500 and MobilePro 1200 were the two most successful and profitable brands because they met customers needs and wants, and stayed true to company mission. The division operated at a net loss during the second and third quarters as gross margins were lower than operating expenses. This was expected as usually initial startup costs are high(sales offices, staff, brand and ad designs and placements) while sales remain low because products are priced low for market penetration and brand recognition and loyalty are virtually non-existent. By the fourth quarter the division turned a profit as sales picked up and gross margins exceeded operating expenses. Quarterly net profit grew tenfold from $1,122,620 to $11,633,561by quarter 5 and another 7 % reaching $12,455,650 by the end of quarter 6. Cumulative net profit for the division was $24,833,861. Judging from past performance it is safe to forecast a 7-10% growth rate in net profit quarterly. ABC analysis table is located in the appendices.

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ProTech, Inc. Appendices and Graphs

Customer profiles

Customer Needs And Wants

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Price Willing To Pay

Competitor profiles - 16 -

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Competitor profiles by geographical markets

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ProTech, Inc. Market and brand forecasts

Market and Brand 8000 7000 6000 Mobile Pro

Sales

5000

Mobile Pro 1200

4000

PT1500 PT1700

3000 2000 1000 0 Q2

Q3

Q4

Q5 Quarters

Balanced scorecard

Cumulative balanced scorecard

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Q6

Q7

Q8

ProTech, Inc.

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