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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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 industrys 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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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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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 companys 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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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

companys 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 companys strengths, weaknesses, opportunities,

and threats were conducted. Strengths: The companys 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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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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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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mix. Products will need continuous improvement through research and

development to keep demand for the companys 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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Key Competitors Profile

ProTechs 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. GBCs 24 % total market share breaks

down within the segments as follows: Workhorse 9%, Mercedes 51%, and

Traveler 23%. GBCs 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 ProTechs products and marketing strategies.

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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 segments 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

companys 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, its distinctive and easy to recognize,

remember, and pronounce. MobilePro 1200 has a brand judgment of 100 and is

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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. ProTechs 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 ProTechs 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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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 ProTechs $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 brands ads

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placed in the top two in consumer ad judgment. Advertising messages stress

quality products at low prices featuring applications matching each segments

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 segments potential is 3763 and

Workhorse 7194, in Paris Traveler segments potential is 2648 , workhorse 7751,

in Toronto traveler segments potential is 1936, workhorse 5562 and in Tokyo

traveler segments 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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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 brands

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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Appendices and Graphs

Customer profiles

Customer Needs And Wants

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Price Willing To Pay

Competitor profiles

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Competitor profiles by geographical markets

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Market and brand forecasts

Market and Brand

8000

7000

6000

5000 Mobile Pro

Sales

Mobile Pro 1200

4000
PT1500
3000 PT1700
2000

1000

0
Q2 Q3 Q4 Q5 Q6 Q7 Q8
Quarters

Balanced scorecard

Cumulative balanced scorecard

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