Marketing Management Plan for an Existing Business - Case Study Example

 Page - 1 Executive Summary : This paper aims at providing a Marketing Management plan for an existing business. The business so chosen here is carpet cleaning. Being an industry that is highly indigenous, the paper details the background, macro environment and growth of the industry. The company information includes the company’s history its areas of operation, and a market analysis. Further to this the details of the company’s sales data for the past three years gives us a fair idea of the company’s growing presence in its geography. The key issues facing the company are detailed in the SWOT analysis. The projected sales of the company for the year 2008 is followed by the objectives for the year and marketing strategy, the means to achieve the projected sales and bottom line numbers. Magic Carpets Inc is a 15-year-old company specializing in the carpet cleaning and is among the top four carpet-cleaning companies based in California. The company decides to get proactive in handling the growing competition in the field especially from the large players in the janitorial services who have a pan American presence and a few multi nationals who are planning to venture into the market in a big way. Magic Carpet believes that it is high time it consolidates is business, capitalizes on its strengths and makes a few smart moves to increase market share and wallet share. The entire approach of Magic Carpet is built around establishing the brand, building loyalty, making differential pricing strategies, acquiring new markets, building new channels of business, nurturing business partners and coming out with innovative service offerings to build value to its services. With this as the base objective, the company draws out its business plan for 2008. There is enough market analysis done by the company before working out the plan for 2008. Page - 2 Action Plans: The action plans are worked out in accordance to the 4P framework – Product, Pricing, Place and Promotion. (Kotler Philip, 2004, Marketing Management) The 4P’s are applied across two broad market segments – existing markets and new markets. The following are the major action plans made to achieve the business objectives of ’08: 1. Identify new markets 2. Increasing wallet share in the existing markets 3. Creating a competitive edge thru innovative product bundling 4. Rejuvenating the brand with fresh approach and outlook. 5. investing in brand promotion 6. Investing in the local communities to enhance god will and leverage the same by ensuring media coverage. 7. To capitalize on the good will generating with the existing client base and offering them long term benefits as incentives that ensure retention of the customers. 8. differential pricing strategy for new markets 9. Venturing into B-to-B tie-ups with major carpet traders, getting a market share of the new carpets sold during the year right from day one. 10. Encouraging performing franchisees to expand the network thru a sub franchisee model, thereby making the franchisees work more and earn more. 11. driving a “Quality of Service” guaranteed campaign in all markets to reinforce on the quality standards 12. To ensure all employees and partners are aligned to the quality promise. 13. By successfully implementing, the plans worked out looking at a substantial increase in market share and wallet share. Page - 3 The table below presents in a nutshell, the action plans, the process owners, the timelines and the budgets allocated against each one of these plans: target market action plan description responsibility timelines budget existing markets 1. establishing sub franchisee network to establish sub franchisees in the existing market; top 10 franchisee to get 10 sub franchisee under their umbrella Manager- alliances jun '08 acquisition cost of USD 950 per sub franchisee   2. Member - get- Member Program that continuously encourages loyalty a. to roll out an unique member-get-member program Manager-Sales Mar '08 acquisition cost of USD 15 per customer     b. to evolve tracking mechanism for managing program benefits thru automation Manager - IT Mar '08 5000 usd   3.Community Development - as a branding exercise as part of community development provide free services in churches, community centers etc CSR team ongoing - 2 per quarter 15000 USD - 2.5k per city of operations     to ensure that there is adequate media coverage to strengthen brand in neighborhood Marketing team on going - 2 per quarter   Page - 4 product development unique value bundles for customers to choose from to launch unique value bundles that will act as USPs for the services thereby enhancing the perceived value of the service operations team two value bundles per quarter 5000 per quarter towards R and D new markets 1.to launch Magic Carpers in six new cities in California direct services rendered in these cities - five franchisees in each town we operate business development dec '08 100,000 USD   launch offers in new cities to work out special launch offers in all new cities marketing team on going case to case   2. tie up with carpet outlets B2B business tie up with 2 of the top 5 carpet selling establishments in each city for bundling services Manager- alliances 8-Oct 25% subsidy on service expenses pricing different pricing strategy for different segments Work out three diff pricing strategy for 1. Existing markets 2. New markets 3, B2B tie-ups. business development team immediate   Page - 5 Projected profit and loss statement Profit and Loss Pro Forma Profit and Loss     FY 2005 FY 2006 FY 2007 FY 2008 Sales $3,238,675 $3,606,362 $4,047,466 $6,000,000 Direct Cost of Sales $971,602 $1,263,277 $1,602,531 $1,142,789 Other $0 $0 $0 $0 Total Cost of Sales $971,602 $1,263,277 $1,542,520 $1,142,789 Gross Margin $2,267,073 $2,343,085 $2,504,946 $4,857,211 Gross Margin % 70.00% 64.97% 61.89% 80.95% Expenses:         Payroll $1,268,747 $1,285,419 $1,305,135 $2,350,492 Sales and Marketing and Other Expenses $66,974 $67,412 $71,456 $124,077 Depreciation $32,557 $33,216 $36,425 $60,315 Leased Equipment $0 $0 $0   Utilities $53,438 $54,216 $56,421 $99,000 Page - 6 Insurance $33,661 $33,661 $34,265 $62,361 Rent $73,518 $73,518 $76,425 $136,200 Payroll Taxes $372,448 $384,526 $390,526 $690,000 Other $0 $0 $0   Total Operating Expenses $1,901,342 $1,931,968 $1,970,653 $3,522,444 Profit Before Interest and Taxes $365,731 $411,117 $534,293 $1,334,767 Interest Expense $0 $0 $0   Taxes Incurred $71,575 $72,563 $73,025 $132,600 Net Profit $294,157 $338,554 $461,268 $1,202,167 Net Profit/Sales 9.08% 9.39% 11.40% 20.04% Source: Template only, Soapy rides car wash, www.bplans.com Controls: The objective of building controls into the system is to constantly track progress make course corrections ensure delivery of plans as per timelines to keep a check on the costs and budgets to assess utilization of people and resources To get ready for contingencies. Page - 7 For Magic Carpets, the elaborate business plans made for 2008 necessitated elaborate controls. With different process owners involved at various stages of execution of the action plans, there was a definite need to build adequate checks and balances at every stage of the plans to ensure successful completion to derive the necessary results. The teams involved for the various plans made are as follows: 1. marketing team 2. business development team 3. sales team 4. operations team 5. the customer service team 6. the logistic team 7. the finance team The following are the broad controls that are to be fixed to ensure strict vigil over the business movements and to track action at every stage of implementation processes: Budget control: A constant check on whether the various projects are running within the allocated budgets. To ensure that the money spent is correctly allocated to the corresponding head of account. To act as a watchdog ensuring the complete budgets worked out are under control. Project Control: Each action plan is a project by itself and hence it becomes important that they are well project managed. Hence, each one of the action plan will have the process owners as the project leads. Page - 8 Every project needs to be broken into granular details and every stage of the project has to be closely monitored. The controls will serve several purposes: to ensure that the various stages of each project is completed within timelines if there are bottle necks there are alternate plans made to meet the end goals To ensure that the various stakeholders in the project provide complete support at every stage. To ensure that there is a dashboard that is published to the management that gives briefly the progress of the project. Process Controls: It is not important for Magic Carpets to achieve the results only. The means by which the result is achieved is equally important. Hence, process adherence is of paramount importance to successful implementation of action plans. Short cuts adopted might show short-term results but definitely are a recipe for failure even in the medium term. Hence, it is important that the goals are achieved as per the set processes and there are no deviations. Process controls helps achieving the following: defining work processes to achieve the desired goals ensuring that the process is adhered to and there is no deviation It also helps to check effectiveness of processes. Processes if found ineffective can be re-engineered. Process controls also helps in scaling up action plans with least efforts Page -9 Quality Control: Quality service has been the hallmark of Magic Carpet’s success story so far. Hence, in its aggressive scaling up plans it just cannot afford to lose focus on its core strength – quality of delivery. Moreover, its ‘Quality Service Assurance’ Program, ‘Abracadabra’ makes it even more necessary to have the controls on quality tighter than ever. Impact of various programs: It is also essential to measure the impact many of the promotional and branding program have on the target audience. The impact or success of various promotional and branding initiatives can be measured and controlled by following methods: By measuring the results and business as forecasted By doing sample surveys across target base. By obtaining feedback from customers in a structured manner By hiring third party organizations to do a market survey and submit a report to measure the impact of various branding activities and CSR activities. CONTINGENCY PLANS: Magic Carpet has laid out a robust contingency plan to face any kind of emergencies that arise without notice. There are two levels of contingency plans drawn out by Magic Carpet. Plan A is to ensure smooth running of the existing business without any failures. Plan B is to handle situations that arise because of the current business plans not working out as they are supposed to be. Page - 10 Disaster management: Magic Carpet works on the definition ‘any condition that prevents you from performing your critical business functions in an acceptable period of time’ is defined as disaster. The disaster management contingency plan is worked out in various ways as listed under Business Recovery plan and Business Contingency Plan. Business Recovery Plan: Business recovery plan primarily works on data security – as client data is the wealth of information for businesses like carpet cleaning. Therefore, Magic Carpet works proactively on protecting information by creating back ups on a daily basis on the critical data for the business like: Names and Telephone Numbers Defined roles and responsibilities Escalation procedures Relocation Information Vital records and data location Critical Vendor Information Media Information Page -11 Business Contingency Plans: Magic Carpet has made adequate back up plans to execute in case of some of their core business plans not taking off. The back- up plans have the following parameters or factors that necessitate the change: change in environment recessive market conditions slump in economy war or emergency political situations - change in business environment onslaught from janitorial services new big players entering into the market new self-clean products ( high end variants of the vacuum cleaner) launching in the market increase in local players in the cities where the service is being rendered change in financial environment cost of plan implementation higher than budgeted lending rates increase marketing expenses higher than budgeted specific channels of business planned turning out to be non-starters. Magic Carpet has considered the above factors and has already made adequate contingency plans to overcome these situations. Each plan has a back up plan depending on the emerging contingency situation thereby ensuring that Magic Carpet still gets as close to their original goals set as possible. Page – 12 References: The US Carpet cleaning industry, Industry Overview, July 2006, Market Data Enterprises ,Retrieved on July 10, 2008, www.marketresearch.com Business Plans Handbook, Volume 3, 1996, Chem Corporation, Carpet cleaning services, Retrieved on July 12, 2008, www.findarticles.com Marketing Plan sample, Soapy rides Car cleaning, Palo Alto Software, Retrieved on July 9, 2008. www.bplans.com Kotler Philip, (Pg 115,116 Chap 4, Part 2) Contents of the Marketing plan, Marketing Management, Eleventh Edition, Prentice Hall Marketing. Read More