Table of Contents
- Customer Analysis
- Target Market
- Current Marketing Objectives and Performance
- Marketing Strategies
- Marketing Mix
- Budget and sales forecast
- Financial Objectives
- Year-to-year Growth of 5% in the 2nd year and 15% in the 3rd year
- Maintain net profit of 30% or equals to $1,698,070 in 3-year period
- Retain 93% of sales from subscription segment
- Financial Plan
- Profit Plans of Cell-Navi
- Related Marketing essays
Cell-Navi is an innovative service product that allows direct from Internet to cellular phone navigation service. This is a low-cost substitute product for more expensive GPS navigation systems and company-specific services. Therefore, marketing heavily on brand recognition is very important. A second focus of marketing is pricing and customer satisfaction. The marketing strategy is strongly focused on Internet and selective brick and mortar ‘specialty’ stores. The target market is especially geared towards business commuters with moderate income and education levels. The marketing strategy relates well to the business and financial characteristics of the company. Furthermore, the industry environments within which Cell-Navi functions are highly technological, so future recommendations rely on continuous improvement, analysis and benchmarks against competitors.
A service is “A deed, a performance, an effort” (Rathmell 1966). Services rely on things for their performance. Development and implementation of a market orientation concept a services marketing context is important. In addition to this, services are an important imperative in manufacturing businesses as they are an important tool for enhancement and differentiation of the product offer. The service is called Cell-Navi, which is a new service that cellular phone users can purchase/download as an application for an additional fee (monthly subscription $8.99 unlimited use, or $1.99 per use). It will be used to look up both driving directions and directions by walking. Basically, it provides both directions for driving (long-distance/freeway) as well as walking (local directions). The Cell-Navi provides all the features of a standard, advanced navigation system on the cellular phone at a much lower price in comparison to other GPS systems. It is just like the navigation systems available today. The application features voice-prompted turn-by-turn directions with auto-rerouting if one misses a turn while driving, as well as local search of point of interests, detailed, color maps.
The emerging digital technology within the past decades has enabled telecommunication systems to convert any kind of information (voice, data, and video) into other forms. This advantage of digital age, in turn, enables customer to experience the era where they can communicate in many forms: voice (telephone, handy talky etc), data (multimedia message services/MMS, facsimile, FTP etc), and video (video streaming, video conference, video on demand etc). This situation refers to the era people call as the convergence in digital technologies.
The obvious characteristics are cellular phone users. In the United States, there are over 190 million users, of which continue to grow. The sex is about 50/50, but is slightly higher for males. It is mostly for people who travel often, such as company employees and businessmen/women. Because it is geared mainly for those who can drive (for driving directions), the age is 18 or older, up to about the late 50’s (but mainly focusing on 18-mid 30’s for reasons explained below). The education background is high school graduate or above (college graduate). Because the service costs an additional $9.99/month, the annual income must be average, or above average. However, it must not be too high, because those with a higher income tend to already have such navigation systems available (such as their luxury car with an equipped navigation system). The ethnic background is not so much a characteristic, but since this service is available in English only, but the user must be somewhat proficient in English.
The usage rate is either a free 30-day trial, a one-time fee of $1.99 (which is good for lower-frequency users or at times of emergency), and a monthly subscription rate of $9.99/month (unlimited use). The strongest benefits Cell-Navi offers is a low cost alternative to installed or hand held expensive GPS devices. As a service product, Cell-Navi allows customers to choose their own usage rate, and any consumer with Internet on their cell phone (or at home) can purchase and download the product. This is especially beneficial to persons who do not travel often, but are going on vacation, travelling for an urgent business need. The other usage rate option is monthly fee, which is marketed towards the constant commuter and business traveler.
Current Marketing Objectives and Performance
Primarily, the goal of the marketing mix is to create strong brand visibility on low funding. Duncan (p 346 2006) shows the media mix options as being print, broadcast, out of home, and interactive. It is also important to create strong visibility for Cell-Navi product through mass media, which is designed for delivery to large audiences through technology, such as television, radio and Internet advertising. That is to say, cellular phone customers are seeking out new and inventive services. This is proven by the success of cellular Internet service, Cellular music services, and so on.
- Cell phone users (over 190 million in United States)
- Commuters, including personal (vacation) and business.
- Government agencies (Law enforcement, Emergency Vehicles)
- Delivery Companies (Taxis, Food, UPS)
a) Product: Concerning the Cell-Navi, the company is the pioneer in the navigation industry that offers cell phone navigational software/service. It enables users to look up both driving directions and directions by walking. Basically, it provides both directions for driving (long-distance/freeway) as well as walking (local directions). The application features voice-prompted turn-by-turn directions with auto-rerouting if one misses a turn while driving, as well as local search of point of interests, detailed, color maps. With Cell-Navi, one will be able to know where one is, what is around, and how to get from point A to B.
b) Price: Price is about what will charge customers for products and services. Pricing scheme should consider profit margins and the possible pricing response from competitors. In addition, pricing strategies should compose not only the listed price but also discounts and annual membership with additional benefits such as free overtime. The cost of using Cell-Navi should be kept as affordable as possible ranging lower than it would cost to buy a navigational system for a car ($300-$1500), and higher than the cost of just browsing the web through cell phones ($10/month). Current rates for competing companies are $15/month (not including web browsing fees~$10/month). Cell-Navi will also charge $15/month and do constant research to maintain the most competitive rates.
c) Place: Place is about how to bring the products together with the customers. In this section, describe how the products and customers “meet” or come together through sales and distribution. Moreover, describe the sales philosophies, methods, and distribution system (“Marketing Mix”).Cell-Navi will be made available to all cell phone users domestically, and will be available for every major service carrier (Sprint/Nextell, Cingular, Verizon, T-Mobile). Place (distribution). Regarding the place, Cell-Navi will be made available to all cell phone users domestically, and will be available for every major service carrier (Sprint/Nextell, Cingular, Verizon, and T-Mobile). The distribution value chain will be direct to the customer downloads from the Internet. The value chain is compromised of the software vendor to the Cell-Navi web page and then directly to the customer, which saves the customer time (driving to the store) and money (shipping fees).
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d) Promotion: Cell-Navi will promote to anyone who is tired of wasting time and money from getting lost. Currently, Cell-Navi will promote by advertisements on the Internet and by distributing brochures and flyers to be displayed at cell phone stores. It would be beneficial to show the savings to shipping companies (UPS, DHL), to delivery companies (Pizza Hut, Dominos), and also government agencies (law enforcement and emergency staff), because of the ability for Cell-Navi to help its customers save time and money by being able to always take the shortest route. The promotion plan of Cell-Navi is strongly Internet based. This includes utilizing browser search engines such as GoogleAdWords, Yahoo, and advertising on web-based cell phone ‘stores.’ Marketing to specific retailers of cellular products (Radio Shack, for example) is also a strong marketing advantage, as this allows customers shopping for cellular phones to see the advantages of innovative services.
Budget and sales forecast
Theoretically, marketing objectives elaborate points to be achieved within a given period. Therefore, marketing objectives for Cell-Navi must be measurable such as objectives to increase revenue by 5% in the 2nd year and 15% in the 3rd year as we use in this calculation for financial and profit plans. Concerning the situation, I suggest two general objectives of Cell-Navi as following:
- Sales of $5,660,232 within 3 year of commercial operation, representing over 15,000 unlimited users and 5,000 per use customers within the 3-year period
Year-to-year Growth of 5% in the 2nd year and 15% in the 3rd year
Maintain net profit of 30% or equals to $1,698,070 in 3-year period
Retain 93% of sales from subscription segment
Quality control plans become important factors in determining the success of a marketing plan; therefore, there is a need to create quality control plans. According to two of Deming’s 14 principles, the process improvement should follow following criteria:
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Table 1 Quality Control
|1||Revenue evaluation||Quarterly (minimum 80% achievement)|
|2||Market Share||Monthly (min. 60% market share)|
|3||Customer Satisfaction Index||80% (minimum)|
Concerning the financial plan, we assume that Cell-Navi has two schemes: packaging (monthly subscription) and non-packaging plans each with different requirement. Following table represent the projected turnover or revenue within the next three years. This number is in line with the profit plan as presented at previous section.
In the objective section above, we assume that the growths of business are 5% in the 2nd year and 15% in the 3rd year due to increasing awareness about the benefits of navigation system. The increase in the volume of sales within the coming period would result in the following profit plan:
Profit Plans of Cell-Navi
Assuming that there is no additional purchase of fixed cost then the 5% increase in sales in the 2nd year and 15% in the 3rd year will also increase the total variable cost by 5% and 15%, respectively. The calculation revealed that an increase in sales and cost of sales by 5% and 15% in the 2nd and 3rd year will create a 30% increase in gross operating profit. In short, the proportion of fixed cost is 57% of the total cost and variable cost is 43% of the total cost. Fixed costs compose of rental facilities and employees costs while variable costs include electricity, maintenance and many others.
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With Cell-Navi being one of the first companies to offer this innovative type service/software to help people get to their destinations safely, and most cost efficiently, they must have a staff of competent and friendly customer service. Cell-Navi does this by making every employee experts who not only use Cell-Navi on a daily basis, but who have also taken seminars to learn more about this industry. Managers of course must know the product/service like the back of their hands, and also continue to research the market, product, and development in order to further benefit company growth.