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FELICIA BROWN
M1-PPM DEVELOPING A STRATEGIC MARKETING PLAN FOR DCI BABY BEDS NOVEMBER 11, 2010

TITLE OF ASSIGNMENT: DATE :

A THREE-YEAR STRATEGIC MARKETING PLAN DEVELOPED BY ABC MARKETING CONSULTANTS FOR THE BABY BEDS DIVISION OF DIVERSIFIED CONGLOMERATE INCORPORATED [DCI]

TABLE OF CONTENTS 1.0 Executive Summary 1.1 Objectives 2.0 SWOT Analysis 3.0 Market Analysis 3.1 Product review 3.2 Target Markets 3.3 Market Segmentation 3.4 Competition 3.5 Competitive Edge 4.0 Distribution Channels 5.0 Marketing Implementation Strategies 5.1 communication Strategy 5.2 Pricing Strategy 6.0 Expense Budget Summary 6.1 Strategy Control 6.2 Marketing Organisational structure 7.0 References

1.0

EXECUTIVE SUMMARY

If you dont know where you are going, any road takes you there.{1} The aim of this report is to develop a Strategic Marketing Plan based on the findings of the information given to ABC Marketing Consultants by George Russel, Division Manager at DCI responsible for baby beds. It is also to make recommendations to DCI for competitive pricing and promotional policies that will support DCIs baby bed marketing objectives.

Diversified Conglomerate Incorporated [DCI], is a leader in air compressors and basketball backboards, both low growth industries, and coffee imports, a high growth industry. In addition, DCI has a substantial presence in baby beds and innerspring mattresses and has recently started ventures in biotechnology and retailing gourmet coffee. However, for the purpose of strategic Marketing Planning, we are treating DCI baby beds as a separate company. With the current stiff competition from new competitors in the industry, there is the need for a quality baby beds line with a broad spectrum of design choices, along with a robust customer service in order to gain advantage over our competitors and meet customers needs. Building a strong market position in the low-end segment, the company aims to create a solid revenue stream, which is projected to grow substantially between Forecast Year One [2011] and Forecast Year Three[2013]. Providing attention to the design development, ordering process, manufacturing management, customer care, installation and maintenance will put us on the road to success.

This strategic marketing plan seeks to deliver quality but affordable baby beds while also providing a fast, error-free ordering system so that DCI baby beds will continue to expand through organic growth and acquisition in related market segments, provide added-value service to a large customer base throughout the low-end market segment and offer clear-cut features and improvements over competitors products

1.1 OBJECTIVES
Increase sales by 20% by the end of year One Target of selling 200,000 baby beds by end of year one Achieve sales of $50,000,000.00 by end of year one Report annualized profits of $25,000,000 in year one Increase sales revenue to more than double Year One levels by the end of Year Two Have overseas franchises in 5 key markets by the end of year two Secure 40% of the market segment by year three Have overseas franchises in 10 key markets by end of year three

2.0 SWOT ANALYSIS STRENGTHS

Key major retailers, K-MART, WAL-MART, SEARS acquired The current economic market situation, where the United States is undergoing a recession, has not affected the markets which cater for products for infants and young children. As such we will continue to enjoy a great deal of economic stability in the area of baby bed sales. Birth rates in the country remain stable Market for baby beds is growing beyond the rate of supply

WEAKNESSES
Absence of strong sales and marketing expertise Competitors command premium prices and more features Reliance on only one trusted supplier DCI baby beds is just breaking even with flat sales

THREATS
Major Taiwanese supplier may enter the targeted market segment with two new products New product features may make our baby beds obsolete Emerging new technologies may move the market in new directions Economic slowdown could reduce demand Euro/yen may move against the dollar

Market may become price sensitive Market segment growth could attract major competition A recent study touting the infant sleep carousel as producing a happier baby may reduce baby beds sales

OPPORTUNITIES
Market segment is poised for rapid growth Export markets offer great potential Distribution channels seeking new baby beds Scope to diversify into related market segments

3.0 MARKET ANALYSIS

The current market situation for baby beds is that of a competitive market. The business of baby-oriented furniture selling is a large industry that generates in excess of $9.2 billion per year. This industry grows at an average of 4.6% per year.{2} There are four million babies born in the US annually and one million baby beds are sold annually.{3}

3.1 PRODUCT REVIEW

DCIs baby beds are essentially made with four main components: the wooden parts, the brackets, the innerspring mattresses and the metal parts. The wooden parts and innerspring mattresses are manufactured by DCI, while the bracket and other metal components are outsourced. Our baby beds are designed for babies and infants between day-old and fortyeight months. Features consist of caster wheel, big comfortable adjustable mattress, and stationary sides, available in brown and white colours.

3.2 TARGET MARKETS

DCIs baby beds demographic are expectant families and mothers of infants. The ages of this demographic range between 18 and 49, with special focus on the lowend market segment.

3.3

MARKET SEGMENTATION

Although we have segmented our target population into two groups based on needs, our marketing strategies rely on another level of breakdown, that is, marketing to the families and friends of expectant mothers and mothers of infants who may or may not have similar needs.

3.4

COMPETITION

DCI baby beds are among the market leaders with 15% of the market share, currently selling 100,000 baby beds annually. It is a competitive market. Although some of them deliver quality products, some with more features than ours, with some also commanding premium prices, they fail to deliver a full turnkey package. With nobody commanding more than 15% share of the market currently, we hope to break this trend and be the market leader.

3.5 COMPETITIVE EDGE

To be corporate and marketing-successful, we need to create clear advantages for our customers, know who really our competitors are and where they are going to be in three years from now; surprise customers by doing things competitors do not do, to make them happy. We have to attract and keep our customers by creating customer loyalty. {4} Our competitive edge will be our flexibility on style, backed by excellent customer service with free installation while maintaining a low overhead. Adding new product features will help DCI stay ahead of competitors and help our baby beds gain more publicity.

4.0 DISTRIBUTION CHANNELS

DCI baby beds are currently distributed through the major retail outlets, namely K-MART, WAL-MART and SEARS. We need to dominate and maintain shelf space at retailers nationwide. One of the obstacles we have to overcome is not to allow competitors products to dominate ours at the retail outlets and make our baby beds the first reference product at these outlets. We can achieve this by improving the quality of our baby beds with more innovative designs, a wide colour range and by making them easier to install. This will reduce extra installation costs for the customer and will enable our product to sell quickly, gain a huge market share and higher sales revenue.

5.0 MARKETING IMPLEMENTATION STRATEGIES

YEAR ONE STRATEGY To help promote DCI baby beds via word-of-mouth, each baby bed will have two coupons, one of them to notify a friend, so a user can give one of the coupons to another friend who gets a discount of 5%. The other coupon will be used by the customer for a repeat purchase which will fetch a discount of 5%. This is to promote recommendations to potential customers, generate excitement and encourage repeat purchases.

We will start participating in trade shows and missions to make our products known to people. We need two new suppliers to quickly replace the supplier who had gone out of business and the Taiwanese supplier in case they stop supplying us. We will hold monthly meetings with the marketing, sales, technical services and customer care managers to check on market sales and progress of the marketing strategy. We will open vibrant customer service centres with showrooms in major cities to display our products and baby beds. This centre will take care of sales, installation, after sales services and enquiries. Product ordering by phone and through our website will also be handled by this centre. We will employ customer care advisors, sale, marketing and installation staff to handle the customer care centres and marketing department. We will train them on how to completely satisfy our customers needs. The marketing department will work together with other departments like the technical department to organise seminars and informative events for potential customers.

YEAR TWO STRATEGY In addition to year one strategy, we will develop overseas entry plans to boost sales. We will find markets in the African countries which have big unexploited markets in Ghana, Nigeria, Ivory Coast, South Africa and Liberia. We will give franchises and licensing agreements to agents who deal in quality furniture and baby products to sell our baby beds.

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YEAR THREE STRATEGY In year three, we will use differentiated or segmented marketing, where we will design baby beds for the mid-range and high-end segments to target every purse and personality. We will also manufacture custom-made baby beds on request. This year three marketing strategy will enable us to get higher sales and a stronger position in each market segment because by then we will already have had a large customer base in the low-end market segment. We will add more overseas franchising and give licensing agreements to agents in Britain, France, Germany, Spain, Italy and Russia.

5.1 COMMUNICATION STRATEGY

We cannot survive just waiting for the customer to come to us. Instead, we need to focus our marketing message and our product offerings and communicate it. The platforms we will use for the customers in our demographic will include word-of-mouth, the internet, direct mail catalogues and health talks. Making ourselves known to our target segment will generate some strong leads, along with getting personal recommendations to other expectant families and mothers of infants. There are countless products targeting this demographic, like baby diapers, dresses, toys and baby food so we will use undifferentiated or mass marketing strategy for the first two years to go after the whole market with one offer to enable us to focus on the common needs of our target market. We need to develop aggressive promotional strategies to enable them to buy baby beds with emphasis on our brand.

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This strategy will be directed to appeal to the largest number of buyers as possible to enable us get a large customer base. The keywords for our promotional campaign will be: SAFETY, COMFORT AND FLEXIBILITY. Our promotional strategy would focus on the fact that safety should always come first. We will capitalise on the fact that some of our competitors have been sued because babies fell off their drop-side beds. Our brand of stationary baby beds have sides spaced out enough that the baby will not be able to get his or her head between them, or fall off the beds. Our goal is to establish a reputation for baby beds which provide safety, comfort and flexibility which our customers would consider important because no mother would like her baby to fall off a bed or choke to death because of a bad mattress. We will promote the fact that our mattresses are of top quality and have sufficient air circulation to allow the baby to breathe if they end up lying face down after turning whilst asleep. Our baby beds are also flexible in that they are made for narrower spaces and can be placed anywhere no matter the space. The baby feels comfortable in the bed and sleeps peacefully and soundly, allowing the mother to also sleep or have some time to do other things. It is easier to install without any help or additional installation costs. Even if you need help, our installation comes at no extra cost to you. We will develop a really robust website to advertise and sell the whole DCI product range. We will monitor the traffic to our website to know the number of people making enquiries. This will enable us to see results within days instead of not knowing whether a print advertisement has any effect.

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Those who click to find information about baby beds will be directed to landing pages, which will be optimised for search engines so that when internet users search on various keywords, our pages will rank highly in their search results. Expectant families and mothers like to share notes with other expectant families and mothers. Our website will create a forum where people can post and respond to comments freely as well as offer suggestions for new features. We will also use platforms such as Twitter, Facebook, Orkut, Myspace and pop-up advertisements on search engines on baby products. We will use our email marketing list and database to inform our customers and potential customers about new product features, discounts or promotions and give them the privilege of being the first to know. This will make them feel special and will encourage repeat purchases and word-of-mouth. We need to reach our target market at the ante-natal and post-natal clinics and hospitals where the companys technical people will give talks to expectant and nursing mothers. Part of our promotional strategy will be to network with obstetricians, pediatricians and midwives who are mostly in contact with our target market. This will make our baby beds the first point of reference by these professionals which will help position our baby beds on the leading edge. We will use public relations tools like press releases; corporate advertising like image and financial advertising to reinforce our identity and enhance our reputation. Press releases will emphasise our baby beds three key benefits: SAFETY, COMFORT, FLEXIBILITY and will offer a lot of technical detail that will appeal to the editors and most importantly to effectively reach the core target market. With our limited budget, initial adverts in direct mail catalogues will be small typically no larger than a one-eighth page. Adverts in magazines for expectant mothers will also be of the same length to register our baby beds in the minds of our target market.

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5.2 PRICING STRATEGY

We will use the penetration pricing strategy, that is, low cost and higher sales because the cheap price is going to do the trick for our low-end products and will enable us to penetrate the market in the first year. The price range of baby beds in the market is between $200 and $300 for low-end baby beds, between $500 and $1000 for mid-range and between $1500 and $2500 for high-end baby beds. Customized baby beds cost above $3000, depending on the features and design. Our show rooms and website will sell our baby beds at $250.00 for year one. From year two, we will increase our prices to between $275 and $300 because the new product features and recognisable brand name will make our target market willing to pay a small premium price for our brand. In year three, we will sell our baby beds at between $300 and $350 depending on the market situation. We will also undertake promotional pricing by giving longer warranties and free delivery services. Because of our pricing strategy, we need to have a strong brand differentiation, thereby creating a significant obstacle for copycat brands to overcome. This will drive domestic consumers to recognise the DCI brand of baby beds for its perceived higher quality and ability to satisfy the needs of our target market and eventually build a large consumer base willing to pay a small brand premium.

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6.0 EXPENSE BUDGET SUMMARY

Marketing expenses are mostly for new customer care centres, advertising and for staff required to do the marketing activities listed. Most of the software tools needed to implement the online promotion such as analytics and landing page creation are available for free. The exceptions to this are specific tools like email markets, search engine pop-ups and forums. We expect an increase in marketing staff through outsourcing during year one because we need people to put the marketing plan processes into place. We anticipate second and third year marketing expenses to increase by 8%, again mostly for covering the cost of additional staff to help facilitate the additional requirements. Marketing expenses will be around 15% of total sales. The planned expenses for year one is $900,000. That of year two is expected to have an increase of 8% which will be $972,000. That of year three will be $1,049,760 Funding will be provided by John Sullivan, CEO of DCI.

6.1 SALES FORECAST

If we take an average of $250 per baby bed, and multiply that by 200,000 units, that gives us a total of $50,000,000 in baby beds bought for year one. We estimate a growth of 20% annually.

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We estimate that two out of ten expectant mothers who visit the landing page or sees a pop-up engine will buy a baby bed and four out of every ten expectant mothers who want to buy baby beds will buy our baby bed. We do not think this is unreachable, especially in a still growing market. Additionally, baby beds and related items are demanded by families regardless of negative economic climates and as such, the business will be able to sustain any moderate decline in top line income. We believe this is a conservative forecast and we are sure to make our numbers in year one as a result of more effective marketing. We anticipate strong sales growth over the next three years. Sales will come from three sources: a. Retail outlets K-MART, WAL-MART, SEARS b. Online sales c. Customer care centres/Showrooms which will also handle telephone orders

6.2 STRATEGY CONTROL, MONITORING AND MEASUREMENT

In order to make sure that we are on track, we have created a variety of key metrics that we will measure monthly. Other success metrics will be: The number of speaking engagements Five-star baby bed reviews Industry awards Number of baby beds sold

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Email list and Database size. We will pay attention to the number of tweets we make, the number of followers on Facebook and the number of enquiries on search engines. We will use the preventive type of control for our proposed tasks to check mistakes and delay. For instance when the competitors react to our change in strategies by either copying us or change their prices, we will respond appropriately with alternative actions. We will also adopt corrective control measures if any problem should occur and address it immediately.

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6.2 MARKETING ORGANISATIONAL STRUCTURE

MARKETING MANAGER

SALES MGR + CUSTOMER CARE MGR + TECHNICAL SERVICES MGR

INSTALLATION & MAINTENANCE OFFICERS ONLINE SALES MGR SHOWROOM MANAGER

ONLINE SALES REPS

CUSTOMER CARE ADVISORS

7.0

REFERENCES

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1. 2. 3. 4. 5. 6.

http://www.monografias.com

October 27, 2010 http://www.businessball.com October 27, 2010 http://www.thefinanceresource.com October 27, 2010 http://www.babyfurniturecribssite.com October 27 ,2010 http://www.thinkexist.com October 27, 2010 Touchie R.D., Preparing a successful business plan, Self-counsel press, 2005, 4th Edition, pp 41-66

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