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 Confidentiality Agreement

The undersigned reader acknowledges that the information provided by

_________________________ in this marketing plan is confidential; therefore, reader agrees not
to disclose it without the express written permission of _________________________.

It is acknowledged by reader that information to be furnished in this marketing plan is in all

respects confidential in nature, other than information which is in the public domain through other
means and that any disclosure or use of same by reader, may cause serious harm or damage to
________________________.

Upon request, this document is to be immediately returned to _________________________.

___________________
Signature

___________________
Name (typed or printed)

___________________
Date

This is a marketing plan. It does not imply an offering of securities.

 Table Of Contents

1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

2.0 Situation Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

2.1 Market Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
2.1.1 Market Demographics . . . . . . . . . . . . . . . . . . . .2
2.1.2 Market Needs . . . . . . . . . . . . . . . . . . . . . . . .2
2.1.3 Market Trends . . . . . . . . . . . . . . . . . . . . . . . .3
2.1.4 Market Growth . . . . . . . . . . . . . . . . . . . . . . . .3
2.2 SWOT Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
2.2.1 Strengths . . . . . . . . . . . . . . . . . . . . . . . . . .4
2.2.2 Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . .4
2.2.3 Opportunities . . . . . . . . . . . . . . . . . . . . . . . .5
2.2.4 Threats . . . . . . . . . . . . . . . . . . . . . . . . . . .5
2.3 Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
2.4 Product Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
2.5 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.6 Critical Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

3.0 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

3.1 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
3.2 Marketing Objectives . . . . . . . . . . . . . . . . . . . . . . . . . .7
3.3 Financial Objectives . . . . . . . . . . . . . . . . . . . . . . . . . .7
3.4 Target Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
3.5 Positioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
3.6 Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
3.7 Marketing Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
3.8 Marketing Research . . . . . . . . . . . . . . . . . . . . . . . . . .8

4.0 Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.1 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.2 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.3 Expense Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

5.0 Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.1 Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.2 Marketing Organization . . . . . . . . . . . . . . . . . . . . . . . . 12
5.3 Contingency Planning . . . . . . . . . . . . . . . . . . . . . . . . . 12
 Bike Art

1.0 Executive Summary

BikeArt is a stand-alone kiosk located in the busy Valley River Mall. BikeArt sells assorted pieces
of art as well as furniture made out of recycled bicycle parts. Through outstanding terms and
conditions of their lease, BikeArt will be able to display their larger items on the surrounding
floor space. This should significantly increase sales as walk through traffic in the wall is very
high.

BikeArt will target two market segments, industrial art aficionados and bicycle enthusiasts. Both
of these groups are populous in Eugene. Eugene is a progressive, liberal city which favors
forward-thinking art collectors. Additionally, Eugene is Bike City USA, meaning bicycling is
hugely popular. Having good numbers of these populations will fuel growth.

BikeArt is forecasted to reach profitability by month nine and will have profits of almost $40,000
by year three.

2.0 Situation Analysis

BikeArt is a start-up company. Marketing is critical to success and future profitability. The
company offers art work constructed out of recycled bicycle parts.

2.1 Market Summary

BikeArt possesses good information about the market and knows a great deal about the common
attributes of the most prized and loyal customers. BikeArt will leverage this information to better
understand who is served, their specific needs, and how BikeArt can better communicate with
them.

Target Markets

Industrial art collectors

Bicycling enthusiasts

Page 1
 Bike Art

Table 2.1: Target Market Forecast

Target Market Forecast

Potential Customers Growth 2001 2002 2003 2004 2005 CAGR
Industrial art collectors 8% 5,644 6,096 6,584 7,111 7,680 8.00%
Bicycling enthusiasts 10% 12,545 13,800 15,180 16,698 18,368 10.00%
Total 9.39% 18,189 19,896 21,764 23,809 26,048 9.39%

2.1.1 Market Demographics

Geographics

• The immediate geographic target is the city of Eugene with a population of 130,000.
• A 25 mile geographic area is in need of BikeArt's products.
• The total targeted population is 18,189.

Demographics

• Primarily male.
• Primarily single.
• Progressive.
• Income of at least $30,000.

Behavior Factors

• Progressive.
• Collects art or "cool looking stuff."

2.1.2 Market Needs

BikeArt is providing customers with cutting edge, creative art work designed out of recycled
bicycle parts. BikeArt seeks to fulfill the following benefits that are important to their customers:

• Novelty Items: The products that BikeArt produces are unique and interesting.
• Selection: A wide selection of bicycle art work.
• Accessibility: BikeArt is located in the Valley River Mall and is open all hours that the mall
is.
• Customer Service: The patron will be impressed with the level of service and attention
that they receive.
• Competitive Pricing: BikeArt will price their products to receive a fair margin and to
provide the artist with reasonable compensation.

Page 2
 Bike Art

2.1.3 Market Trends

One trend within the art industry that BikeArt is riding on is the trend of art to utilize everyday
items. This is seen with BikeArt's use of bicycle components. It can also be seen with other artists
that go to junk yards to find pieces of metal and then weld the metal into objects such as animal
lawn ornaments. The trend of creativity in the construction of art from everyday objects has
picked up more and more artists over the last several years.

Market Forecast

30,000

25,000

20,000

15,000
Industrial art collectors
Bicycling enthusiasts
10,000

5,000

0
2001 2002 2003 2004 2005

2.1.4 Market Growth

The world wide art industry is huge. Within the industry there are so many niches that artists fill.
Art is used as a creative expression, as well as an investment that appreciates over time.

As stated before, one trend in the industry is to create art out of ordinary objects. BikeArt will
leverage this trend to grow their business. BikeArt forecasts their market to grow at 9% for the
next three years.

Page 3
 Bike Art

Target Market Growth

10.00%

10.00%
8.00%

8.00%
6.00%

6.00%
4.00%

4.00%
2.00%

2.00%
0.00%

0.00%
Industrial art collectors Bicycling enthusiasts

2.2 SWOT Analysis

The following SWOT analysis captures key strengths and weaknesses within the company and
describe the threats facing BikeArt.

2.2.1 Strengths

• Strong relationships with local artists.

• Excellent employees who are highly trained to offer outstanding customer service.
• Great retail space that provides large amounts of walk-through traffic.
• High-quality product offerings.

2.2.2 Weaknesses

• BikeArt lacks visibility.

• A limited marketing budget to develop company awareness.
• The struggle to get new, creative, artwork.
• Ability to keep up with demand for the products.

Page 4
 Bike Art

2.2.3 Opportunities

• A growing market with a significant percentage of the target market still not aware of
BikeArt's product offerings.
• The ability to increase the sales volume while maintaining the same overhead costs.
• The ability to attract new and exciting artists as BikeArt becomes better known.

2.2.4 Threats

• A shortage of art work produced.

• A slump in the economy which will decrease people's discretionary income.
• A larger, more established gallery starting to sell more of BikeArt's genre of art work.

2.3 Competition

BikeArt has several competitors:

• Other retailers in the mall. People that are gift shopping at BikeArt are likely to visit
other retailers in the mall. While the other retailers are not direct competitors in the sense
that they are selling the same products, their products will act as a substitute product.

• Art galleries. These retailers specifically sell different types of artwork. While some
might specialize or carry a theme of industrial art, none sell bicycle specific art. People
that are looking for a wide range of art work are more likely to go to these retailers.

• Bicycle retailers. Some bicycle shops carry gifts for cycling enthusiasts, and this gift
section may be art work based on bicycles. Some of BikeArt's artists also sell to bicycle
shops so they might have identical pieces. The bicycle retailers do not however, have the
same selection as BikeArt. As BikeArt grows, they will be able to leverage their vendors to
make BikeArt the exclusive dealer for their bicycle art.

2.4 Product Offering

BikeArt will sell artwork manufactured from recycled bicycle parts. The art work will be made by
approximately three local artists, one of which is Steve's wife Shoodnt. Some of the featured
products are: wall clocks, picture frames, chairs, tables, mobiles, wind chimes, book ends,
kitchen utensil holders and many other products.

Page 5
 Bike Art

2.5 Keys to Success

BikeArt's keys to success are the following variables:

• The ability to develop repeat business.

• The increase of transaction amounts per customer.
• The increased diversity and selection of new art work.
• The foresight of determining future customer preferences.

2.6 Critical Issues

BikeArt is still in the speculative stage as a retail store. Its critical issues are to continue to take a
modest fiscal approach; expand at a reasonable rate, not for the sake of expansion in itself, but
because it is economically wise to and continue to develop visibility.

3.0 Marketing Strategy

BikeArt's marketing strategy will be based on the use of several forms of advertising. BikeArt will
generate visibility through advertisements in the local cycling journal, Oregon Cycling. This
journal is read by many cycling enthusiasts, one of the target segments of the market.

BikeArt will also advertise in the Eugene Weekly, a liberal, progressive living arts newspaper for
the Eugene area. The typical reader has a similar market demographics to our customers and the
newspaper is read by many because it is the premier source for determining different cultural
and musical events that are occurring in Eugene.

BikeArt's strategic location of the Valley River Mall will reduce the need to spend a lot of money
to generate visibility because the location provides large amounts of walk through traffic which is
likely to generate sales. While the typical person that visits Valley RIver Mall is not our typical
customer, the mall person will often buy gifts for people and BikeArt's products make excellent
gifts. The money saved from not launching a huge marketing campaign is going to be spent in
increased monthly rent from the Valley River Mall.

3.1 Mission

BikeArt's mission is to provide the customer with functional items and art work made out of
recycled bicycle parts. We exist to attract and maintain customers. When we adhere to this
maxim, everything else will fall into place. Our services will exceed the expectations of our
customers.

Page 6
 Bike Art

3.2 Marketing Objectives

1. To generate visibility within the art and cycling community.

2. Increase the number of repeat customers.
3. Decrease the amount spent on marketing relative to the sales generated.

3.3 Financial Objectives

• A double digit growth rate for the next five years.

• Decrease variable costs every quarter.
• Expand from the Valley River Mall store front within the first several years.

3.4 Target Markets

BikeArt's market can be divided into two groups, industrial art collectors and bicycle enthusiasts.
The industrial art collectors are characterized by people who collect art with an industrial edge.
Industrial art is typically characterized through the use of either very technical looking pieces or
structures or using parts that existed for another function for the basis of the art work. Industrial
art is the opposite of organic art. Industrial art is typically sharp angles, straight lines.

The other market is of bicyclist enthusiasts. Eugene is a bicyclist town, one of the hottest in the
country. In a town of 130,000, there are three bicycle manufacturers, miles upon miles of bike
lanes and independent bike paths. This culture will lend itself to BikeArt. The bicycle enthusiasts
are people that ride a lot and appreciate anything related to bicycles, including bicycle art pieces.

3.5 Positioning

BikeArt will position itself as a cutting edge cycling and industrial art dealer. Both art collectors
as well as gift purchasers will be impressed with the selection and creativity of designs. BikeArt
will leverage their competitive edge of specialization of a market niche to help position
themselves.

• No one else concentrates on this specific type of art. This is truly a competitive edge since
BikeArt is based in Eugene, Ore. aka Biketown USA.

• By only concentrating on this niche, prospective customers will correctly assume that
BikeArt has the largest selection and are more likely to come to BikeArt, as opposed to
going to a bicycle shop looking for art.

Page 7
 Bike Art

3.6 Strategies

The single objective of BikeArt is to be known as a premier place for cycling and industrial art in
Eugene. The marketing strategy will seek to first create customer awareness regarding the
products offered, develop the customer base, and work toward building customer loyalty.

The message that BikeArt will seek to communicate is that it is a prime retailer which has a good
selection of bicycling artwork. This message will be communicated through a variety of forms
including several advertisements in various targeted journals/newspapers.

BikeArt will also leverage the large amount of walk through traffic by creating creative and
thought provoking displays of their products to lure in walk by customers.

3.7 Marketing Mix

BikeArt's marketing mix is comprised of the following approaches to pricing, distribution,

advertising and promotion, and customer service.

• Pricing: BikeArt's pricing scheme will be established to create fair compensation for the
artists, as well as a reasonable profit margin for the company.

• Distribution: All products will be distributed through the Valley River Mall store front.

• Advertising and Promotion: The most successful advertising will be in the Eugene
Weekly and Oregon Cycling. In addition, unique product displays will catch the eyes of the
walk through traffic.

• Customer Service: Obsessive customer attention is the mantra. BikeArt's philosophy is

whatever is needed to satisfy the customer will be done. While this might hurt short-term
profits, it will ensure long-term profitability.

3.8 Marketing Research

During the initial phase of the business plan development, several focus groups were held to gain
insight into the target market. These focus groups provided helpful insight into the decisions and
decision making processes of prospective customers.

An additional source of market research that is dynamic is a feedback mechanism based on a

suggestion card system. The suggestion card system has several statements that customers are
asked to rate in terms of a given scale. There are also several open ended questions that allow
the customer to freely offer constructive criticism or praise. BikeArt will work hard to implement
reasonable suggestions in order to improve their service offerings as well as show their
commitment to the customer that their suggestions are valued.

Page 8
 Bike Art

4.0 Financials

This section will offer a financial overview of BikeArt as it relates to the marketing activities.
BikeArt will address break-even analysis, sales forecasts, expenses forecasts, and how those link
to the marketing strategy.

4.1 Break-even Analysis

The Break-Even Analysis indicates $15,395 will be needed in monthly revenue to reach the break-
even point.

Break-even Analysis

$8,000
$6,000
$4,000
$2,000
$0
($2,000)
($4,000)
($6,000)
($8,000)
$0 $5,100 $10,200 $15,300 $20,400 $25,500

Monthly break-even point

Break-even point = where line intersects with 0

Table 4.1: Break-even Analysis

Break-even Analysis:
Monthly Units Break-even 205
Monthly Sales Break-even $15,395

Assumptions:
Average Per-Unit Revenue $75.00
Average Per-Unit Variable Cost $37.00
Estimated Monthly Fixed Cost $7,800

Page 9
 Bike Art

4.2 Sales Forecast

The first month will be used to set up the kiosk and get things underway. During this month the
part-time employees will be hired and trained. Sales will begin slowly during this first month.
From the second month on, sales will steadily increase because there will be a steady flow of
customers that pass by the kiosk.

Monthly Sales Forecast

$25,000

$20,000

$15,000
Industrial art collectors

$10,000 Bicycling enthusiasts

$5,000

$0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Table 4.2: Sales Forecast

Sales Forecast
Sales 2001 2002 2003
Industrial art collectors $58,229 $115,475 $126,547
Bicycling enthusiasts $87,531 $178,745 $189,785
Total Sales $145,760 $294,220 $316,332

Direct Cost of Sales 2001 2002 2003

Industrial art collectors $29,115 $57,738 $63,274
Bicycling enthusiasts $43,766 $89,373 $94,893
Subtotal Cost of Sales $72,880 $147,110 $158,166

4.3 Expense Forecast

Marketing expenses will be budgeted to spike during the spring as well as during the winter
holidays, two periods where sales are forecasted to increase during the year.

Page 10
 Bike Art

Monthly Expense Budget

$600

$500

$400

$300 Eugene Weekly

Oregon Cycling
$200

$100

$0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Table 4.3: Marketing Expense Budget

Marketing Expense Budget 2001 2002 2003

Eugene Weekly $2,250 $5,000 $10,000
Oregon Cycling $1,800 $4,000 $8,000
------------ ------------ ------------
Total Sales and Marketing Expenses $4,050 $9,000 $18,000
Percent of Sales 2.78% 3.06% 5.69%
Contribution Margin $68,830 $138,110 $140,166
Contribution Margin / Sales 47.22% 46.94% 44.31%

5.0 Controls

The purpose of BikeArt's marketing plan is to serve as a guide for the organization. The following
areas will be monitored to gauge performance:

• Revenue: monthly and revenue.

• Expenses: monthly and revenue.
• Repeat business.
• Customer satisfaction.

Page 11
 Bike Art

5.1 Implementation

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

Table 5.1: Milestones

Milestones Plan
Milestone Start Date End Date Budget Manager Department
Marketing plan completion 1/1/01 2/1/01 Steve Marketing
Eugene Weekly campaign #1 1/1/01 7/1/01 $1,150 Steve Marketing
Oregon Cycling campaign #1 1/1/01 7/1/01 $925 Steve Marketing
Eugene Weekly campaign #2 1/1/01 1/1/02 $2,250 Steve Marketing
Oregon Cycling campaign #2 1/1/01 1/1/02 $1,800 Steve Marketing
Totals $6,125

5.2 Marketing Organization

Steve Useitagyen is primarily responsible for the marketing activities. Steve will receive
outsourced assistance for the creative work.

5.3 Contingency Planning

Difficulties and risks:

• Problems generating visibility.

• Difficulty obtaining sufficient product to sell.
• Significantly lower than forecasted demand.

Worst case risks may include:

• Determining that the business cannot support itself on an ongoing basis.

• Having to liquidate inventory to cover liabilities.

Page 12
 Appendix: Bike Art
Table 4.2 Sales Forecast

Sales Forecast Plan

Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Industrial art collectors $0 $1,245 $1,854 $2,354 $2,987 $4,254 $5,385 $6,458 $7,548 $8,254 $8,745 $9,145
Bicycling enthusiasts $0 $2,245 $3,258 $4,214 $5,214 $7,245 $8,457 $9,365 $10,255 $11,547 $12,687 $13,044
Total Sales $0 $3,490 $5,112 $6,568 $8,201 $11,499 $13,842 $15,823 $17,803 $19,801 $21,432 $22,189

Direct Cost of Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Industrial art collectors $0 $623 $927 $1,177 $1,494 $2,127 $2,693 $3,229 $3,774 $4,127 $4,373 $4,573
Bicycling enthusiasts $0 $1,123 $1,629 $2,107 $2,607 $3,623 $4,229 $4,683 $5,128 $5,774 $6,344 $6,522
Subtotal Cost of Sales $0 $1,745 $2,556 $3,284 $4,101 $5,750 $6,921 $7,912 $8,902 $9,901 $10,716 $11,095

Page 1
 Appendix: Bike Art
Table 4.3 Marketing Expense Budget

Marketing Expense Budget Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Eugene Weekly $100 $100 $100 $250 $300 $300 $100 $100 $100 $200 $300 $300
Oregon Cycling $75 $75 $75 $200 $250 $250 $75 $75 $75 $150 $250 $250
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Sales and Marketing Expenses $175 $175 $175 $450 $550 $550 $175 $175 $175 $350 $550 $550
Percent of Sales 0.00% 5.01% 3.42% 6.85% 6.71% 4.78% 1.26% 1.11% 0.98% 1.77% 2.57% 2.48%
Contribution Margin ($175) $1,570 $2,381 $2,834 $3,551 $5,200 $6,746 $7,737 $8,727 $9,551 $10,166 $10,545
Contribution Margin / Sales 0.00% 44.99% 46.58% 43.15% 43.29% 45.22% 48.74% 48.89% 49.02% 48.23% 47.43% 47.52%

Page 2