Market Ambitions of the Suntrap Solar Company - Example

Table of Contents Table of Contents 1 Student: Tutor: Subject: Date: 1.0 Introduction Suntrap Solar is a new company that intends to offer its customer with clean solar energy through installation of solar energy systems. The company will be located in the western region of UAE. It intends to be the largest solar power provider by making available clean energy to homeowners, schools and organizations in this region. This report will undertake a marketing research and feasibility study for Suntrap Sola. It will focus on the company’s objects, product, price and promotion as well as its market and financial projections. 2.0 Objectives The objectives of Suntrap Solar Company are: To generate sales of 5000 units in the first year, increase these sales by 25% in the second year and 50% in the third year. In the first year, the sales will be relatively few considering that the product is new but this will change in the second and consecutive years considering customers will already be aware of our services. To breakeven within the first two years. We expect to have covered all our costs in the second year. 3.0 Product Product refers to good or services that a company offers to its customers. Suntrap solar main product is solar energy (Palmer P31). The company plans to be the largest solar power provider by making available clean energy to homeowners, schools and organizations in the western region of UAE. The company will design, install, repair and monitor its solar energy systems at a lower cost compared to what they pay for energy generated by burning fossil fuels such as oil, gas and coal. Suntrap solar will install systems to the highest engineering standards while making the switch simple for our customers. The company will perform the entire process from installation as well as offer ongoing repair and monitoring services. 4.0 Market Demand and market potential for the renewable energy has increased in UAE due to the fact that the region has understood the critical role of gas and oil can play as a bridge to a low carbon and sustainable energy. Based on per capital basis, United Arabs Emirates consume more electricity than other regions such as Asia, Europe, or North America. In the western region of UAE, electricity grew by 10%, one of the highest in the world and this is expected to continue until at least 2019 (Wood P1). The high demand of Electricity has been fueled by rapid growth in the residential and commercial megaprojects as well as the industrial sector. According to World Bank, 40% of the western region of UAE is not connected to power (Wood P1). These factors have informed Suntrap Solar decision to establish a company to provide solar power to region. Therefore, the target market of Suntrap Solar will be homeowners, companies, schools and government organizations of the western region of UAE. The company will make available clean energy at an affordable cost as an alternative to monthly utility bills to its target customer. 5.0 Price and Promotion The price of a product is a key element of a company’s marketing mix as it represents the actual gain received by the company after selling its products. There are various factors that influence the setting the price of products includes, operation cost, and profit margin as well as considering how competitors will respond to that price (Palmer P31). For instance, we expect that a third of the cost residential photovoltaic system will come from the cost of solar panels. Therefore, Suntrap Solar price will depend on the location and system size, government rebates and local utility rates To promote its products, Suntrap solar will use various promotional mix which include advertising, sales promotions, direct marketing, personal selling and online advertising. The company aims at appearing on the top of Google and Yahoo search by placing its business in these two companies. Suntrap will design a company website as well as make use of the social media platform to advertise its products to its target market 6.0 Operational Plans Suntrap Solar plans to establish a company in the western region of UAE to design and install solar energy systems to its target market. The company will be divided into four major departments which include sales, Research and Development, production and administration. These departments will be further divided into small sub-departments which will have different roles. Suntrap Solar plans to employ one hundred qualified employees who will be assigned to these departments based on the expertise. However, this number is expected to grow as demand for solar energy increases in this region. To meet its demand and offer quality services at an affordable price, Suntrap solar has listed Trina and Kyocera as their primary suppliers. In delivering solar energy to its customer, the company will design, install, repair and monitor its solar energy systems without requiring the services of multiple third parties. 7.0 Financial projections The starting capital of Suntrap Solar Company will be $690,850. I will use my personal saving amounting to $200,000 to invest in this business, and the balance of $490,850 will be generated through a bank loan. Table: Start-up capital Start-up Funding Start-up Expenses to Fund $170,000 Start-up Assets to Fund $520,850 Total Funding Required $690,850 Assets Non-cash Assets from Start-up $500,000 Cash Requirements from Start-up $190,850 Additional Cash Raised $0 Cash Balance on Starting Date $0 Total Assets $690,850 Liabilities and Capital Liabilities Current Borrowing $0 Long-term Liabilities (Bank loan) $490,850 Total Liabilities $400’000 Capital Equity $200,00 Total Capital and Liabilities 690,850 Total Funding 690,850 Table: Projected income statement Pro Forma Profit and Loss Year 1 Year 2 Year 3 Sales $187,047 $302,343 $538,402 Direct Cost of Sales $80,212 $123,779 $235,086 Other Costs of Sales $0 $0 $0 Total Cost of Sales $80 ,212 $123,779 $235,086 Gross Margin $107 ,835 $178,565 $303,317 Gross Margin % 90.57% 85.28% 85.28% Expenses Payroll $52,600 $73,000 $122,000 Sales and Marketing and Other Expenses $40,800 $40,800 $40,800 Depreciation $1,800 $1,800 $1,800 Rent $6,000 $6,000 $6,000 Utilities $20,400 $20,400 $20,400 Insurance $2,400 $2,400 $2,400 Payroll Taxes $7,890 $13,950 $18,300 Other $1,800 $1,800 $1,800 Total Operating Expenses $121,690 $126,150 $209,500 Profit Before Interest and Taxes ($21,950) $36,415 $93,817 EBITDA $945 $45,980 $45,617 Interest Expense $0 $0 $0 Taxes Incurred $0 $13,924 $13,145 Net Profit ($21,055) $32,490 $30,672 Net Profit/Sales -0.68% 16.06% 12.87% 8.0 Justification It no secret that the solar industry is among the fast growing power sectors in UAE as well as the world. This can be attributed to increasing demand of clean and cheap power by consumers. Moreover, as a result of global warming, energy generated by burning fossil fuels such as oil, gas and coal are been discouraged. Therefore by providing solar energy through designing and installing solar system, Suntrap solar will make available clean and cheap power to its customer in the western part of UAE. Work Cited Palmer, A. Introduction to Marketing - Theory and Practice, UK: Oxford University Press, 2004 Wood A , Solar power in the UAE-Market Overview Emirates: UAE, 2013 Read More