MARKET ANALYSIS 1.

Target market - Individual customers, more specifically post-secondary students - Others the learning disabilities group Sizes of Target Market - Post-secondary students 1 Almost 2M in Canada - Learning disabilities group 2 More than 34M in Canada, and about 1 in 10 Canadians has LD 3 Reading disability (dyslexia) compromises about 80% of LD Target Market and Characteristics 3. Market Profile/Segmentation 4 - Post-secondary students Age: In 2006, over 1.6 million students were enrolled in colleges and universities in Canada and roughly 400,000 of them graduated in that year. Students ranged in age from 10 to 98 years old, but most did not fall on these extremes. Over 75% of students were between 17 and 27 years of age and over 90% of them were under age 40. Sex: Minimal differences between males and females in terms of post-secondary studying in their early 20s. Profession: Some full-time students have part-time jobs, summer/temporary jobs, or contracts. Parttime students usually have a full-time job, or have other commitments during day-time. Income: low to moderate. Demographics: o Geographic: All across the country, mostly concentrated in Ontario, Quebec, BC, and AB o Socio-economic: Various ethnic and cultural backgrounds, with a common interest to gain knowledge from post-secondary education. Mostly Canadians (local and across provinces) with an increasing trend of immigrants and international students o Psychographics: busy, fast-paced lifestyle, multi-tasking, low budget on textbooks, lack of motivation to read textbooks o Buying Behavior: Most textbooks are mandatory buy. It is a one-time purchase and students will only buy one copy at a time. Learning disabilities group Age: Mostly recognized during young age, much higher rate among seniors than among childeren Sex: Both males and females with a slightly higher percentage for males Profession: Mostly unemployed, cannot work or minimal work with disability communities support, caregiver needed if disability is severe Income: low to moderate, with applicable funds from government and health organizations Demographics: o Geographic: All across the country, mostly concentrated in Nova Scotia, New Brunswick, and Prince Edward Island o Socio-economic: Mostly Canadians (local and across provinces) with an increasing trend of immigrants o Psychographics: difficulties with learning, recognize the importance of education, study aids needed during lecture/classes o Buying Behavior: It is a one-time purchase and students will only buy one copy at a time. Product Benefits Study whenever you want wherever you want! o Ability to study everywhere, download it onto electronic devices, and able to play it while driving, while waiting, on public transits, between classes, etc. o Since it is not a classroom-based product, it gives you the ability to replay any part that you dont understand, as many times as you want
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http://www40.statcan.gc.ca/l01/cst01/educ71a-eng.htm http://www.ldac-acta.ca/en/learn-more/ld-basics/ld-at-a-glance.html 3 http://www.nald.ca/ldanb/english/pdf/stats.pdf 4 http://www.statcan.gc.ca/pub/81-004-x/2010005/article/11386-eng.htm

 People learn differently, most effective way to learn is not reading, but audio and visual. Environmental friendly, going green No need to carry books around, lighter backpack, ease out back pain 5. What is the growth (historical/potential) of your market? Growing demand/favor of eBooks, electronic alternatives September-October and January-February (Semester start) Sales, Distribution and Profits by Product/Service

6. Product distribution Products will be distributed using the Internet, they will be retailed at bookstores and several online retailers as well. Once they purchased the products they can download the audios onto their personal devices. The only online distributor in Canada 6 o audiocious Partner-up with Amazons existing audio textbooks platform online to serve the Canadian market iTunes University bookstores The products will be distributed under the company name AT Inc. 7. Are your sales expectation in line with the manufacturing ability to produce it? This all depends upon the firms individual capacity to produce. All products require an audio recording, once the recording session is complete, products can be distributed with no limit o Depending on sales volume, the more customer download the product, the lower the production cost per unit will be - Are your pricing, service and warranty policies attractive and competitive in the marketplace? - What does each product/service cost you to produce? What does each product/service cost you to sell? 8. What will (have) your profits be (been) by product/service? Varies. 9. What are your current sales goals by product/service? Focus on several popular courses at the beginning phase, general/required classes at universities $20,000 sales volume Market Share, Trends and Growth Potential Untapped market. Audio textbooks do not exists in Canada yet o Similar product - audiobooks are getting popular. There are many audiobooks on personal growth, fictions, and other reads serving the visually impaired or disability group. o However there are other alternatives on the market (eBooks, eReaders, videos, interactive eBooks, etc.) With the digital revolution trends, consumers are favoring paper-less alternatives, and are using digital devices more often. More and more clubs and communities are encouraging people with learning disabilities to go back to school. Increasing trend of people with LD are going to school, audio textbooks would help them 7 learn easier.

Service and Warranty Policies

Sample recordings to minimize chances of wrong purchase

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http://en.allexperts.com/q/Popular-Science-357/people-learn-better-listening.htm http://www.audiocious.com/ 7 http://hhh.gavilan.edu/kwarren/college_success/students/cindy_stout/index.htm

Audios cannot be returned, transferred, or copied. Every copy of the recording will be encrypted for business protection. If there is a discrepancy in the product, we will offer a full refund within 30 days of purchase.

Primary Research Target Market and Characteristics Describe your target market, who or what, and give a profile. Discuss how your product/service meets the needs/wants of this market. Discuss the positive and beneficial impacts your product/service has on the market. Discuss the buying record and habits of your customers. State pertinent facts concerning the size, age, location/area, profession, income and other demographic information about the market. Allude to any self performed or professional research, studies or surveys conducted. Include a list of these in a biography in the Appendices. Market Share, Trends and Growth Potential State the percent share of the market you now have or hope to penetrate. Discuss the trends of the market; industry wide, regional and local. State if the market is seasonal, the time frames and how you will adjust and compensate during the off-season. Discuss whether your direct market is increasing or on the decline. Discuss how the market may change over the next 3-5 years. Discuss the growth potential of the entire market and your increased share. State on what assumptions you base these growth patterns (i.e. technology development, changing customer needs, costs etc.). Discuss your rationale and the costs and risks associated with achieving higher levels of penetration.

Sales, Distribution and Profits by Product/Service Discuss your projected sales record by product/service. State what each product/service will be distributed and sold. Describe any unique features of your sales and distribution network. Discuss the implications of transportation, tariffs, duties, foreign exchange and other government regulations. Service and Warranty Policies Describe your service and warranty policies in relation to the industry standard within your market. Describe any unique programs of features of your policies. Discuss your track record and philosophy on these issues. Discuss the reactions of prospective customers towards these policies. State any collection (billing) procedures and discount offers. Discuss any policies with distributors in relation to advertising allowances, return privileges and consignment sales. Discuss any applicable product safety considerations. Common Mistakes to Avoid: - Believing that the size of the market (customer) base is equally distributed (for example, your total market may be North Dakota, but the majority of your sales may come from the eastern part of the state) - Failure to prove that your target market represents the major portion of the demand for your product/service (80/20 rule - 20 percent of the customers may represent 80 percent of the demand) - Unrealistic market share projections (believing you can capture 100 percent of the market) - Failure to demonstrate a clear understanding of the product/service to be sold and to what market - No accurate estimate of the profitability of each product/service - Basing sales projections on a higher degree of output than you have adequately demonstrated can actually be met - Pricing not in line with target market needs, desires or ability to pay - Not properly assessing the total market potential, or changes in the market caused by economic, social or other trends - Not supporting your target market potential, or changes in the market caused by economic, social or other trends

- Not supporting your target market assumptions in light of advances in technology, government regulations, population shifts and economic forces (oil prices, interest rates, etc.) - Addressing (attacking) your market universally; not segmenting your market into various components and developing profiles of each; defining your market too broadly - Presenting your facts to make your market appear subservient to your companys needs instead of vice versa Most general/introductory classes at the universities are taught at university lecture halls, which hold hundreds of students at once. To be conservative, assume the production cost of one audio textbook is $5,000. Prices of audio textbooks will be anywhere around 50%-60% of the hard cover textbooks, which are around $80-$150 each. If there are 200 students in a class and half of them prefer the audio textbooks over traditional textbooks, AT Inc. would at least break even, and every dollar earned after that will be profit.

MODULE 7 - COMPETITIVE ANALYSIS Competitors Profile 1. Who are your nearest and largest major competitors? Amazon has an online audiobook platform, which offers several educational audio textbooks for the U.S. market audible.com
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No direct competition in Canada yet but other substitutes available: traditional paper-copy textbooks, eBooks, and other multimedia and gadgets (powerpoint, video, interactive interface, etc.)

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Is their business steady, increasing, decreasing? Why? Traditional textbooks are getting less popular as users are leaning towards using electronic devices and eco-friendly alternatives eBooks, eReaders, and digital alternatives are growing in popularity because of the paper-less technology

Comparison of Strengths and Weaknesses

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How does your business compare to your competitors (strengths and weaknesses of each)? Strengths Paper-less Mobile and easily accessible Low cost, priced at 50%-60% of hardcover textbooks No inventory Minimal employees required Unlimited production Weaknesses New product, market penetration rate unknown Sales volume undetermined Only one distributor in Canada No physical product

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What are the similarities/dissimilarities between your business and your competitors business? Digital/technology based, eco-friendly On what basis will you compete with them? Compete based on the uniqueness of product Slightly cheaper than most alternatives In what aspect(s) is your business better? (What is your distinctive competence)? 40%-50% less than hardcopy textbooks Minimal internal management required Products are unique and are instantly available after purchase (instant delivery) How does your product/service compare with the competition in the eyes of customers? Benefit the LD group as they can absorb information better with the aid of audio textbooks o Increase the number of LD students at post-secondary institutions

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Lowering down the prices for textbooks, making them more affordable for budget-tight students

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If you have no competition, what kind (who) might you create by being successful in the marketplace? Business model is easily replicable, potential new rivalry arise in the market

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Do you threaten the major strategic objectives or self image of

http://www.audible.com/

the competition? It will decrease their profits to a certain degree but not seriously impact the overall business. o Every audio textbook production needs to acquire legal rights and copyrights from the publications as well as author of the textbook. o Most voice-overs are done by the original author of the textbooks. So they will get compensated for every copy of audio textbook sold in the form of royalties, which is similar to the traditional textbooks. Product/Service Comparison Market Niche and Share The following is a suggested sequence of presentation: Competitors Profile Discuss the competition: size, age, location, sales volume, management, mode of operation and other characteristics. Discuss potential competitors who may enter your market. Product/Services Comparison Discuss the similarities and differences between your product/service and that of the competition. Compare your operations and management style with your various competitors. Highlight whatever it is that makes your product/service and company more attractive in the marketplace. Market Niche and Share State the approximate percentages each of your competitors holds in the market. Discuss those that hold the largest percentages and why they have an edge. Discuss the competitors who have/are coming on strong and are making (or expected to make) bigger gains in the market. Discuss the particular segments of the market that each of your competitors addresses. Discuss your niche in relation to these and what percent of the total market it makes up. Describe where the market is headed and how each competitors niche and share may change over the next 3-5 years. Comparison of Strengths and Weaknesses Discuss your strengths and weaknesses in relation to your major competitors. It is helpful to list the variables down the left hand column and the competition and your company along the top of the page. The reader can quickly summarize the characteristics, as well as the strengths and weaknesses of all participants at a glance. The major strengths and weaknesses you should summarize are: product superiority, price advantages, market advantages (large contracts with customers or suppliers, proximity to a larger market, proximity to labour supplies, raw materials, energy, transportation, land or other resources) and finally, management strengths and weaknesses (experience and track record, skills, etc.). Common Mistakes to Avoid: - Not identifying known major competitors - Underestimating competitive strength and potential - Failure to demonstrate your competitive edge - what makes you unique or better - Having no strategy for counteracting current competition or emerging competition - Assuming you have no competition - Failure to show an awareness of competitors place in the market and their business cycles

MODULE 8 - MARKETING STRATEGY 1. What is the sale appeal of your product or service? It is a new idea in Canada, deriving from existing products (audiobooks). However audio textbooks 9 products are available for other markets outside of Canada. (e.g. The U.S.) 4Ps: o Price: 40%-50% cheaper than traditional textbooks and 10%-20% cheaper than eBooks o Place: study whenever you want wherever you want! o Promotion: sample recordings of each product o Product: technology-based, digital learning, paper-less It is a homogenous product with a different form. The material and information is the similar and almost identical to a textbook or an eBook, but audio version It is a specialty product as only specific group of consumers would purchase these goods (e.g. professors and students enrolling the same courses using these textbooks) It is a business-to-consumer product How will you attract and maintain your market? Market Development, Diversification, and New Product Development all alternate strategies to market penetration Igor Ansoff Market Growth grid Existing Market Market Penetration New Product Development New Market Market Development Diversification

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Existing Product New Product

Market penetration: o More purchase and usage from existing customers encourage repeat sales with sale offers, discounts on multiple purchases setting up a database mailing customers with relevant offers o Convert non-users sample chapters sales promotion (e.g. free account dollars for inviting friends and family) brand recognition Market development: o New market sectors Other markets with similar education system and materials Private universities/colleges, online universities/colleges

PLC and timeline (what period of time) Competitive advantage o One time fixed costs, no inventory o Identical products do not exists in Canadian market but the idea of audiobooks are getting popular, so market acceptance will be higher

Market Penetration goals (if this is, in fact, your strategy) Positioning o Pioneer the untapped niche market, and to become the market leader in the audio textbook industry in Canada

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How will you identify prospective customers? Post-secondary students o Tight on budget or prefers learning from audio materials o Enrolled in a general/required course that uses a specific textbook (AT Inc. has the audio version of the textbook)
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http://www.audible.com/t1/30trial_at?source_code=COMGB900TWS022912&AID=10358792&PID=2216635

Usually purchase products online at the beginning of each semester, and is a one-time purchase o End user of the book, and can only access the audio textbook for current semester (around 4 months) Can use the product unlimited times for up to 4 months LD group o Have difficulties learning, or visually impaired Most LD students recognize their disabilities and do not pursue further education because of the limited options on the market Study partner usually needed for post-secondary education o Pursuing post-secondary education, and are enrolled in courses we have audio versions of textbooks in o (same above)

Sales and Distribution 4. How will you reach the decision makers? Company website o Which will direct consumers to the distributors or retailers website Retailers will be both online and offline (bookstores) o Consumer targeting Students nowadays purchase textbooks from university bookstores, from online retailers, as well as company websites

Advertising, Public Relations and Promotions 5. What level of selling effort, if any, is necessary? Why is this the best approach? In-class advertising o More direct to the specific markets, notify them there is a cost-saving alternative Comparison advertising will be used o Having audio textbooks brochures and pamphlets at bookstores with prices on so consumers can compare the alternatives Social medias and textbook exchange websites Word of mouth Advertising is important at the initial stage of the business, once reputation has been built, advertising can be slowly eliminated How long will the above activities take? Advertising is a continuous process, heavy emphasize during the first two weeks of every semester o Brochures and pamphlets are used year round at the bookstores o Social media and in-class advertising are focused on in the first two weeks of classes What geographic areas will be covered? All universities across Canada teaching the same course o However, as a start-up, we will be focusing on the Alberta market for now Number of students in all universities in AB Pricing and Packaging 8. What will your pricing strategy be? We will enter the market with a price skimming strategy o Unique, new product in the Canadian market o High initial fixed cost o Discount decisions can be make after breakeven (covering production costs) Easier with price skimming strategy Margin is moderately high in this industry o About 50%-60% of retail price is the profit How may pricing change after time? After covering the production costs

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PLC and the Consumer Adoption Curve

How will your packaging and labeling enhance name identification and foster brand loyalty? Since there is no physical product, brand loyalty is established by customer satisfaction and word of mouth/referrals in this business What will be your credit and collection policies? It is a one-time purchase, one-time fee Online purchasing Service and Warranty Policy

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The following is a suggested sequence of presentation: Market Penetration Goals Describe your plans for entering the market. State what your estimated sales and share will be. Discuss the sales appeal of your product/service and your priorities for targeting that appeal among specific segments of the market. Discuss how you will identify prospective customers within each segment, how you will prioritize them and how you will reach them. State your timetables for achieving these penetration goals and how your strategy may be affected by the reactions of competitors. Discuss any major customers who have been pre-committed and how they may help you to further penetrate the market. Pricing and Packaging Describe your pricing policies and how they are determined. Discuss the influences of the competition, discounts, cost of goods, market forces and other factors that will affect pricing. Justify your prices, particularly if they are substantially above or below the prices of similar products/services in the marketplace. Above all, demonstrate that your pricing decisions are based on your companies ability to make a profit. Discuss your packaging and labeling design plans. Describe how the brand name, colours, logo and overall packaging will entice customers to buy. Discuss the directions or instructions that accompany the produce and how you make the product easy to use. Sales and Distribution Discuss any relationships you have with suppliers and/or distributors. Mention any distribution or licensing agreements that are in force or that you are seeking. Describe how your product/service will be distributed and over what geographical area. Discuss the method(s) of sales and distribution in terms of licenses, franchises, agency contracts, wholesaling, retailing, direct sales and other methods. Discuss how these will be attracted, compensated and controlled. Discuss your selling arrangements in terms of cash sales, financing, leasing, credit and payment terms. If you will be employing salesmen, discuss their quotas and incentives. (Remember that sales volume will be directly proportional to the number of effective sales calls made. Prospective investors will want to see you knocking on doors.) Discuss briefly your hiring, training and promotion program. Service and Warranty Policies Describe your service arrangement, product support, warranty terms and customer orientation of these things. Discuss how these policies make you competitive and how they may affect profits. Discuss the procedures for implementing these policies. State how they are reviewed by management and how they may change or be improved upon as you gain experience. Describe how you will handle customer complaints and other problems with the product/service. Advertising, Public Relations and Promotions Describe your advertising, public relations and promotional programs and campaigns. Discuss the mediums you will use and any professional ad agencies you may retain. Describe your overall approach and strategy for introducing your product/service and gaining its market familiarity and acceptance. Discuss how the companys name, or the product/service name may contribute to market identity. Discuss your attendance at conventions and trade shows within the industry.

Common Mistakes to Avoid: - Discussing marketing and sales in the same terms: (Sales is dealing directly

with your customers; it is a developed art form. Marketing is enticing them to consider your product; it is an acquired discipline.) - Justifying your prices by the cost to produce, market and/or sell your product/service. (Sales price is a function of value in the eyes of your customers only. Too low a price is as detrimental as too high a price.) - Assuming that your sales efforts, whether in-house or factory direct, network can be set up with minimal time and expense; (It takes as much as one year for a salesperson to get acquainted with a product and learn a territory.) Start-up ventures should investigate using established agent/representative/distributor networks; the learning curve and amount of time to establish is much shorter. - Assuming your distribution network will give your product/service equal sales time, if you do use an independent agent or representative - Failure to promote marketable differences in your product over the competition - Attempting to immediately fill several lucrative, but unrelated market gaps - Strategy too broad, not rational or achievable Underestimating the importance of packaging and brand name identification