60 PART 1 UNDERSTANDING MARKETING MANAGEMENT

DEVELOPING MARKETING STRATEGIES AND PLANS | CHAPTER 2 60

Sample Marketing Plan Pegasus Sports International*

61 PART 1 UNDERSTANDING MARKETING MANAGEMENT
DEVELOPING MARKETING STRATEGIES AND PLANS | CHAPTER 2 61

1.0 Executive Summary 2.0 Situation Analysis

Pegasus Sports International is a start-up aftermarket inline skat- Pegasus is entering its first year of operation. Its products have
ing accessory manufacturer. In addition to the aftermarket been well received, and marketing will be key to the development of
products, Pegasus is developing SkateTours, a service that brand and product awareness as well as the growth of the
takes clients out, in conjunction with a local skate shop, and customer base. Pegasus International offers several different
provides them with an afternoon of skating using inline skates aftermarket skating accessories, serving the growing inline skating
and some of Pegasus’ other accessories such as SkateSails. industry.
The aftermarket skate accessory market has been largely
ignored. Although there are several major manufacturers of
the skates themselves, the accessory market has not been 2.1 Market Summary
addressed. This provides Pegasus with an extraordinary
Pegasus possesses good information about the market and
opportunity for market growth. Skating is a booming sport.
knows a great deal about the common attributes of the most
Currently, most of the skating is recre- ational. There are,
prized customer. This information will be leveraged to better
however, a growing number of skating competitions,
understand who is served, what their specific needs are, and how
including team-oriented competitions such as skate hockey as
Pegasus can better communicate with them.
well as individual competitions such as speed skate racing.
Pegasus will work to grow these markets and
Target Markets
develop the skate transportation market, a more utilitarian use of
■ Recreational
skating. Several of Pegasus’ currently developed products have
patents pending, and local market research indicates that there ■ Fitness
is great demand for these products. Pegasus will achieve fast, ■
Speed
nificant
sig- market penetration through a solid business model, ■ Hockey
long-range planning, and a strong management team that is able
to execute thisteam
management exciting
haveopportunity. The three
over 30 years principalspersonal
of combined on the
■ Extreme
and industry experience. This extensive experience provides
Pegasus with the empirical information as well as the passion
2.1.1 Market Demographics
to provide the skating market with much-needed aftermarket The profile for the typical Pegasus customer consists of the
products. Pegasus will sell its products initially through its Web following geographic, demographic, and behavior factors:
site. This “Dell” direct-to-the-consumer approach will allow
Pegasus to achieve higher margins and maintain a close Geographics
relationship with the customers, which is essential for producing ■ Pegasus has no set geographic target area. By leveraging the
products that have a true market demand. By the end of the expansive reach of the Internet and multiple delivery services,
year, Pegasus will have also developed relationships with Pegasus can serve both domestic and international customers.
different skate shops and will begin to sell some of its products ■ The total targeted population is 31 million users.
through retailers.

TABLE 2.1 Target Market Forecast

Target Market Forecast

Potential Customers Growth 2011 2012 2013 2014 2015 CAGR*

Recreational 10% 19,142,500 21,056,750 23,162,425 25,478,668 28,026,535 10.00%

Fitness 15% 6,820,000 7,843,000 9,019,450 10,372,368 11,928,223 15.00%
Speed 10% 387,500 426,250 468,875 515,763 567,339 10.00%
Hockey 6% 2,480,000 2,628,800 2,786,528 2,953,720 3,130,943 6.00%
Extreme 4% 2,170,000 2,256,800 2,347,072 2,440,955 2,538,593 4.00%
Total 10.48% 31,000,000 34,211,600 37,784,350 41,761,474 46,191,633 10.48%

*Compound Annual Growth Rate

Source: Adapted from a sample plan provided by and copyrighted by Palo Alto Software, Inc. Find more complete sample marketing plans at www.mplans.com. Reprinted by permission of Palo Alto Software.
D an intrinsically enjoyable sustainable business that windsurfing. Windsailing
e activity in itself. has a loyal customer originated in Santa Monica
m base. but did not take off until it
■ Users spend money
o on gear, typically sports had already grown big in
g equipment. Europe.
r 2
a ■ Users have active .
p lifestyles that include
h some sort of recre- 1
i ation at least two to .
c three times a week. 3
s
■ There is an
2 M
almost equal
ratio . a
between 1 r
male and . k
female e
users.
2
t
■ Ages 13–46, with 48%
clustering around ages M
23–34. The recreational a T
users tend to cover the r r
widest age range, includ- k e
ing young users through n
active adults. The fitness e
users tend to be ages t d
20–40. The speed users s
tend to be in their late N Pegasus will distinguish
twenties and early thirties.
The hockey players are
e itself by marketing products
e not previ- ously available to
generally in their teens
skaters. The emphasis in the
through their early d past has been to sell skates
twenties. The extreme s and very few replacement
segment is of similar age
Pegasus is providing the parts. The number of
to the hockey players.
skating community with a skaters is not restricted to
■ Of the users who are any one single country,
wide range of accessories for
over 20, 65% have an continent, or age group, so
all variations of skating. The
undergraduate degree there is a world market.
company seeks to fulfill the
or substantial Pegasus has products for
following benefits that are
undergraduate virtually every group of
important to its customers:
coursework. skaters. The fastest-
■ Quality growing seg- ment of this
■ The adult users have a
craftsmanship. The
median personal income of sport is the fitness skater.
customers work hard for
$47,000. Therefore, the marketing is
their money and do not
being directed toward this
enjoy spending it on
B group. BladeBoots will
disposable prod- ucts that
e enable users to enter
work for only a year or
h establishments without
two.
a having to remove their
v ■ Well-thought-out skates. BladeBoots will be
i designs. The skating aimed at the recreational
o market has not been skater, the largest segment.
r addressed by well- SkateAids, on the other
thought-out products that hand, are great for
F serve skaters’ needs. everyone.
a Pegasus’ industry The sport of skating will
c experience and personal also grow through
t dedication to the sport will SkateSailing. This sport is
o provide it with the needed primarily for the medium-to-
r informa- tion to produce advanced skater, and its
s insightfully designed growth potential is
■ Users enjoy fitness products. tremendous. The sails that
activities not as a means ■ Customer service. Pegasus has manu- factured
for a healthy life, but as Exemplary service is have been sold in Europe,
required to build a following a pattern similar to
 Another trend is group A W indus
skating. More and more try
groups are get- ting together
n e
■ Decreased
on skating excursions in cities a a product costs
all over the world. For l k through economy
example, San Francisco has y n of scale
night group skating that
attracts hun- dreds of
s e ■ The ability to leverage
other industry
people. The market trends i s participants’ marketing
are showing continued s s efforts to help grow the
growth in all directions of e general market
skating. The following SWOT
analysis captures the key s
strengths and weaknesses 2
2 ■ The reliance
within the company and
on outside .
. describes the opportunities
capital 2
1 and threats facing Pegasus.
necessary to .
. grow the
2 4
4 business
. ■ A lack of retailers
T
M 2 who can work
face-to-face with h
a .
the customer to r
r 1 generate brand e
k and product
S a
e awareness
t t
t ■ The difficulty
r of developing s
e brand
G awareness as
■ Future/potential
n competition from an
r a start-up already established
o g company market participant
w t ■ A slump in the economy
t h 2 that could have a
h s . negative effect on
In-
2 people’s spending of
With the price of skates ■
discretionary income on
going down due to depth .
fitness/ recreational
competition by so many industry 3 products
skate companies, the experie
nce ■ The release of a
market has had steady
and O study that calls into
growth throughout the
world, although sales had
insight p question the safety
slowed down in some ■ p of skating or the
Creative, inability to prevent
markets. The growth
yet o major skating-
statistics for 2007 were practica r induced traumas
estimated to be over 35
million units. More and
l t
product
more people are designe u 2
discovering— and in many rs n .
cases rediscovering—the i 3
■ The use of a highly
health benefits and fun of
skating.
efficient, flexible t
business model i C
utilizing direct
2 customer sales and e o
. distribution s m
2 ■ p
2 Partic e
. ipatio
S n
t
W 2 withi i
O . n a t
2 growi
T ng
i
o
n
Pegasus Sports International
is forming its own market.
Although there are a few
companies that do make
sails and foils that a few
skaters are using, Pegasus is ■ The second product is t 3
the only brand that is truly SkateSails. These sails i .
designed for and by skaters. are specifically designed
The few competitors’ sails for use while skating.
c 1
on the market are not Feedback that Pegasus a
designed for skating, but for has received from l M
windsurfing or for skaters indicates i
skateboards. In the case of skatesailing could
I s
foils, storage and carrying become a very popular
are not practical. There are sport. Trademarking s s
different indirect competitors this product is s i
who are manufacturers of the currently in progress. u o
actual skates. After many
years in the market, these
■ The third product, e n
SkateAid, will be in
companies have yet to s Pegasus Sports
production by the end of
become direct competitors the year. Other ideas for As a start-up business, International’s mission is to
by manufacturing products are under Pegasus is still in the early provide the customer with
accessories for the skates development, but will stages. The critical issues the finest skating accessories
that they make. not be disclosed until are for Pegasus to: available. “We exist to attract
Pegasus can protect ■ Establish itself as the and maintain customers.
2 them through pending premier skating With a strict adherence to
. patent applications. accessory company. this maxim, success will be
ensured. Our services and
4 ■ Pursue controlled
products will exceed the
2 growth that dictates that
expectations of the
P . payroll expenses will
customers.”
5 never exceed the
r revenue base. This will
o help protect against 3
d K recessions.
e .
u ■ Constantly monitor
2
c y customer satisfaction,

t s ensuring that
the growth strategy will M
t never compromise a
O service and satis-
r
f o faction levels.
k
f e
S 3.0
e t
u Mar
r i
c
i c keti n
n ng g
e
g Str
s
Pegasus Sports s ate O
International now b
offers several The keys to success are gy j
products: designing and producing The key to the marketing
■ The first product that products that meet market strategy is focusing on the e
has been developed demand. In addition, speed, health and fitness, c
is BladeBoots, a Pegasus must ensure total and recreational skaters. t
cover for the wheels customer satisfaction. If these Pegasus can cover about
keys to success are achieved,
i
and frame of inline 80% of the skating market
skates, which allows it will become a profitable, because it produces v
skaters to enter sustainable company. products geared toward e
places that normally each segment. Pegasus is s
would not allow them 2 able to address all of the
differ- ent segments within ■ Maintain positive, strong
in with skates on. . growth each quarter
BladeBoots come with the market because, although
a small pouch and
6 each segment is distinct in (notwithstand- ing
belt that converts to a terms of its users and seasonal sales patterns).
well-designed skate C equipment, its products are ■ Achieve a
carrier. r useful to all of the different steady increase
segments. in market
i penetration.
■ Decrease 3 5
customer
acquisition .
costs by 4 P
1.5% o
p T s
e
r a i
r t
q g i
u
a
e o
r t n
t i
e M
r
n
. a g
r
Pegasus will position itself
k as the premier aftermarket
3
e skating accessory company.
.
t This positioning will be
3 achieved by leverag- ing
s Pegasus’ competitive edge:
F With a world skating market industry experience and
of over 31 million that is passion. Pegasus is a
i
steadily growing (statistics skating company formed by
n released by the Sporting skaters for skaters. Its
a Goods Manufacturers management is able to use
n Association), the niche has its vast experience and
been created. Pegasus’ aim personal pas- sion for the
c sport to develop innovative,
is to expand this market by
i promoting SkateSailing, a useful accessories for a
a new sport that is popular in broad range of skaters.
l both Santa Monica and
Venice Beach in California.
The Sporting Goods
O Manufacturers Association
b survey indicates that skating
j now has more participation
e than football, softball, skiing,
and snowboarding
c combined. The breakdown
t of participation in skating is
i as follows: 1+% speed
v (growing), 8% hockey
(declin- ing), 7%
e extreme/aggressive
s (declining), 22% fitness
(nearly
■ Increase the profit
7 million—the fastest
margin by 1% per
growing), and 61%
quarter through effi-
recreational (first-timers).
ciency and economy-
Pegasus’ products are
of-scale gains.
targeting the fitness and
■ Maintain a significant recreational groups, because
research and they are the fastest growing.
development budget These groups are gearing
(as a percentage themselves toward health
relative to sales) to and fitness, and combined,
spur future product they can easily grow to 85%
developments. (or 26 million) of the market
■ Achieve a double- in the next five years.
to triple-digit
growth rate for the
first three years. 3
.
3 mentioned marketing l
. methods will create demand M
for the sales literature, which s
6 a
will be sent out to customers. This section will offer the
The cost of the sales r financial overview of Pegasus
S literature will be fairly k related to marketing
t minimal, because it will use e activities. Pegasus will
the already-compiled address break-even
r information from the Web
t
analysis, sales forecasts,
a site. i expense forecast, and
t n indicate how these activi-
e 3 g ties link to the marketing
. strategy.
g
i 7 R
e e
s M s
a e
The single objective is to r
position Pegasus as the
a
premier skating accessory k r
manufacturer, serving the e c
domestic market as well as t h
the international market. The i
marketing strategy will seek to Pegasus is blessed with the
first create customer n good fortune of being
awareness concerning the g located in the center of the
offered products and services skating world: Venice,
and then develop the P California. It will be able to
customer base. The leverage this opportune
message that Pegasus will
r location by working with
seek to communicate is that o many of the dif- ferent
it offers the best-designed, g skaters that live in the area.
most useful skating r Pegasus was able to test all
accessories. This message of its products not only with
will be communicated
a its principals, who are
through a variety of methods. m accomplished skaters, but
The first will be the Pegasus also with the many other
Pegasus’ marketing program
Web site, which will provide a dedicated and “newbie”
is comprised of the following
rich source of product users located in Venice. The
approaches to pricing,
information and offer con- extensive product testing by
distribution, advertising and
sumers the opportunity to a wide variety of users
promotion, and customer
purchase. A lot of time and provided Pegasus with
service.
money will be invested in the valuable product feedback
site to provide the customer • Pricing. This will be and has led to several design
with the perception of total based on a per-product improvements.
professionalism and utility for retail price.
• Distribution. Initially,
Pegasus’ products and
Pegasus will use a direct-
4
services.
The second marketing to-consumer distribution .
model. Over time, it will
method will be
use retailers as well.
0
advertisements placed in
numerous industry • Advertising and
magazines. The skating promotion. Several F
industry is sup- ported by different methods will i
several different glossy be used for the
magazines designed to advertising effort. n
promote the industry as a • Customer service. a
whole. In addition, a number
of smaller periodi- cals
Pegasus will strive to
achieve bench- marked
n
serve the smaller market levels of customer care. c
segments within the
skating industry. The last i
3
method of communication is
. a
the use of printed sales
literature. The two previously 8
4 e Recreational $455,740
. c Competitive $ 72,918
1 a Total Sales $528,658
s
B t Direct Cost of Sales 2011
r Recreational $ 82,033
Pegasus feels that the sales
e forecast figures are Competitive $ 13,125
a conservative. It will steadily Subtotal Cost of Sales $ 95,158
k increase sales as the
advertising budget allows.
- Although the target market
E forecast (Table 2.1) listed all 4
v of the potential customers .
e divided into separate groups,
3
the sales fore- cast groups
n customers into two
categories: recreational and E
A competitive. Reducing the x
n number of categories allows
p
a the reader to quickly discern
information, making the chart e
l more functional. n
y s
s M e
i o
s n F
The break-even analysis t o
indicates that $7,760 will be h r
required in monthly sales l e
revenue to reach the break-
even point.
y c
a
S s
TABLE 4.1 Break-Evena t
l
The expense forecast will be
e used as a tool to keep the
Break-Even Analysis:
s department on target and
Monthly Units Break-Even
provide indicators when
Monthly Sales Break-Even
F corrections/modifications are
Assumptions: needed for the proper
o
Average Per-Unit Revenue implementation of the
r marketing plan.
Average Per-Unit Variable Cost e
Estimated Monthly Fixed Cost c
a
4 s
. t
2

S TABLE 4.2 Sales For

a
l Sales Forecast
e
Sales 2011
s

F
o
r
Milestones

TABLE 4.3 Milestones

Plan

Milestones Start Date End Date Budget Manager Department

Marketing plan completion 1/1/11 2/1/11 $ 0 Stan Marketing

Web site completion 1/1/11 3/15/11 $20,400 outside firm Marketing
Advertising campaign #1 1/1/11 6/30/11 $ 3,500 Stan Marketing
Advertising campaign #2 3/1/11 12/30/11 $ 4,550 Stan Marketing
Development of the retail channel 1/1/11 11/30/11 $ 0 Stan Marketing
Totals $28,450

Monthly Expense Budget ■ Customer satisfaction

■ New-product development

5.1 Implementation
The following milestones identify the key marketing programs. It is
important to accomplish each one on time and on budget.

5.2 Marketing Organization

Stan Blade will be responsible for the marketing activities.
 TABLE 4.4 Marketing Expense Budget

Marketing Expense
Budget 2011 e 2012 2013 5.3 Contingency
s
: Planning
Web Site $ 25,000 $ 8,000 $ 10,000
Advertisements $ 8,050 $ 15,000 $ 20,000 Difficulties and Risks
m
Printed Material $ 1,725o $ 2,000 $ 3,000 ■ Problems generating
n visibility, a function of
Total Sales and Marketing $ 34,775 $ 25,000 $ 33,000
t being an Internet- based
5Expenses h start-up organization
. Percent of Sales 6.58%l
y
3.60% 4.14%
■ An entry into the
Contribution Margin $398,725 $544,652 $621,202 market by an already-
0Contribution Margin/Sales 75.42% 78.40% 77.86% established market
a competitor
n
C d Worst-Case Risks
o ■ Determining that the
n a
n business cannot
t n support itself on an
u ongoing basis
r a ■ Having to liquidate
o l equipment or intellectual
capital to cover
l liabilities
s
The purpose of Pegasus’
marketing plan is to serve as
a guide for the organization.
The following areas will be
monitored to gauge
performance:
■

R
e
v
e
n
u
e
:

m
o
n
t
h
l
y

a
n
d

a
n
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u
a
l
■

E
x
p
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s