Marketing Plan of Far Horizon's - Essay Example

Section I - Marketing Plan A marketing plan for Far Horizon should consider some economic concepts that will affect the company's operations. First, it should consider the state taxes that will be deducted from its net income; this will greatly affect how much is scraped-off from its Earnings Before Income Taxes. Second, the company should consider the prevalent labor prices in the state; since it will require a labor-intensive construction of a new convention center, it should therefore have an idea of how much it will have to spend on labor. Third, the company should be aware of competitors' price, so that it can appropriately price the goods and services that it will provide, to competitively match the price of other companies. Lastly, it should be aware of the income level of its target market, so that it can appropriately price the goods and services that it will offer, to match the market's willingness to purchase. Product strategy Far Horizon has to make a product strategy that is very sensitive to its customers unique needs, as well as one that is innovative and quality-driven. The customers for this type of service are very scrutinizing, in a way that each set of customers have very unique needs, which might not be the same which the next set of customers. Far Horizon must therefore avoid the scenario where it will commoditize its products, in a way that it provides the same type of service to its different customers. Instead, the company must allow for a certain level of customization, for each accommodation package that the customers will demand, and it must make its service cater to the needs of its customers (and not the other way around). Another factor that will affect its product strategy is the generic type of service that this industry provides. Far Horizon can capitalize on this, by making its services more unique, to rouse more interest from its present customer base and to uniquely distinguish itself from competitors and similar companies. Along with customization, unique new features and creative add-ons will make Far Horizon, as a brand, stand-out from the rest of the competition. For example, the company may be bold enough to try hosting themed team-building events for corporate customers, or they may also try to hold festivals and cultural shows (in cooperation with the state) to coincide with a related conference or convention. Lastly, Far Horizon has to focus on consistently delivering quality-driven service to all of its customers. The high-level of customization and innovation will bring in a good bulk of the customers, but quality-driven service will retain the good customers, and will make them spread the news about Far Horizon's services to other potential customers. The innovative and customized features that the company can offer will be meaningless if quality is not stressed. Therefore, for Far Horizon to be a market leader in this service industry, it also has to be the market leader in delivering quality service to all of its customers. Place Strategy The most obvious factor that would affect Far Horizon's place strategy is its proximity to highways, airports or other transportation hubs. More and more customers would want to avail of Far Horizon's services, if the place was immediately accessible from public highways and airports. Another factor that can affect the company's place strategy is the scenic view that surrounds the place. While the company should focus on delivering customized and innovative quality service, it can also factor in the scenic surroundings around the place, to further enhance the company's image. Lastly, the overall attractiveness of the city or state of location affects the image that the company will project to its customers. If the city or state is known to maintain a high level of crime and theft, for example, then customers will still not be attracted to avail of Far Horizon's services. On the other hand, if the city or state has a good reputation among business and socio-civic organizations, then more customers will probably avail of the company's services. Promotion Strategy The most important factor that can affect the company's promotion strategy is the relationship with businesses and organizations. Since these are the company's main target customers, the company should focus on building long-term relationships with them, in order for the company to better understand the preferences and behaviors of its target market. Moreover, it is important for the company to be well-known among business and organizational circles, for it to be considered a viable option for the functions of its target markets. Aside from this, advertising and media rates will greatly affect the company's promotional strategy. The company should be know how much the prevalent advertising and media rates are, so that it can also know how much it is willing to spend on advertising and promotions. Lastly, the company should be aware of ongoing competitor promos, not only within its locality, but also within the state or nearby cities/states. For the company to be the market-leader in this type of service, it should look well beyond its locality to study how its best competitors promote the products and services that it can offer. This will affect how the company will strategize its advertising and promotions, since it has to keep up with its best competitors. Pricing Strategy In drafting its pricing strategy, the company has to study its cost structures, so it can earn the desired amount of profit from its operations. A company has to make sure that it charges more than what it is spending on its operations. Factors like labor prices, materials prices and maintenance and overhead costs should be considered by the company in devising its pricing strategy. Aside from this, the company always has to study the competitors' pricing strategies. It cannot price its services too high versus the competition, since doing so would make the company lose all its customers. However, it cannot price its services too low, since the company would lose money from its operations if it is charging below its operational costs. Lastly, the company has to be aware with the price sensitivities of its customers. The company has to be aware of the willingness of certain market segments to purchase specific types of services or features that it can offer. Even though a certain price tag can be attributed to quality service, part of delivering this quality service to its target market is the avoidance of over-pricing and charging too much. Therefore, the company has to match its pricing strategy with the detail of quality that it will provide to the specific customer, as well as to the customer's willingness to pay. Section II - Financial Statements The Far Horizon, A Sole Proprietorship Income Statement Six Months Ended June 30, 2000 Revenues Sales $199,200.00 Cost and Expenses Cost of Goods Sold - Food and Supplies 95,986.00 Depreciation Expense 1,333.33 Insurance Expense 800.00 Interest Expense 350.00 Marketing Expenses 3,400.00 Miscellaneous Expenses 1,500.00 Professional Fees 9,500.00 Salary Expense - Mgr 12,000.00 Salary Expense - Workers 54,080.00 Total Costs and Expenses 178,949.33 Net Income $20,250.67 The Far Horizon, A Sole Proprietorship Balance Sheet As if June 30, 2000 ASSETS Current Assets Cash $27,839.00 Inventory - Food and Supplies 2,000.00 Prepaid Insurance 1,600.00 Total Current Assets 31,439.00 Property, Plant and Equipment Land 40,000.00 Convention Center Building 100,000.00 Restaurant/Bar Building 100,000.00 Less: Accumulated Depreciation (1,333.33) Net Property, Plant and Equipment 238,666.67 Total Assets 270,105.67 LIABILITIES AND EQUITY Current Liabilities Accounts Payable $2,135.00 Interest Payable 350.00 Current Portion of Mortgage 526.00 Total Current Liabilities 3,011.00 Noncurrent Liability Mortage Payable $56,844.00 Owner's Equity $190,000.00 Retained Earnings (from Income Statement) 20,250.67 Total Liabilities and Equity $270,105.67 The Far Horizon, A Sole Proprietorship Statement of Cash Flows Six Months Ended June 30, 2000 Operating Cash Flows Net Income 20,250.67 Accounts Payable 2,135.00 Depreciation Expense 1,333.33 Interest Expense 350.00 Marketing Expenses (3,400.00) Miscellaneous Expenses (1,500.00) Professional Fees (9,500.00) Prepaid Insurance (1,600.00) Salary Expense - Mgr (12,000.00) Salary Expense - Workers (54,080.00) Inventory (95,986.00) Net Operating Cash Flow (174,247.67) Investing Cash Flows Purchase Property (240,000.00) Financing Cash Flows Owner's Equity 190,000.00 New Mortgage 60,000.00 Repay Mortgage 2,630.00 Net Financing Cash Flow 252,630.00 Net Decrease in Cash (161,617.67) The Far Horizon, A Sole Proprietorship Statement of Changes in Owner's Equity Six Months Ended June 30, 2000 Owner's Equity - Beginning 190,000.00 Net Income 20,250.67 Distributions to the Owner 0.00 Owner's Equity - Ending 210,250.67 Section III - Budget A. Budgeted Revenues The projected increase in Far Horizon can be attributed to the following factors: 1. better overall management as a result of the new onsite manager - The new onsite manager will have a better management of the restaurant's operations, and can thus cause the revenues to increase. 2. the new innovative menu that will be implemented - The innovative menu will improve the service quality of the restaurant as a whole, and will raise its status since it will be able to provide better food options to customers. This could stimulate more interest on the restaurant, and this could eventually bring more customers for the restaurant. 3. more aggressive promotions to local customers - With more aggressive promotions, more customers will be interested to try out the restaurant, thus bringing in more revenues. 4. increase in the profit margin of bar products Increasing the profit margin of bar products, as the consultant recommended, will naturally increase the sales attributed to the bar's operations. 5. 6 months operation of the restaurant this year Aside from the projected 25% increase on monthly sales from last year (as explained by the previous assumptions), this year's revenues will be higher than that of last year, since the company will be fully operational from January to June of year 2001 (as compared to a limited 4-month operation of the first half of year 2000). B. Budgeted Expenses 1. better overall management as a result of the new onsite manager - The new manager will have a better hand at the restaurant's operations, thereby reducing the operational costs of the establishment. 2. reduced idle time for the workers - The reduced idle time is expected to bring in lower labor costs, since workers will be employed only when they will be not idle. Consequently, workers will only be paid when they are employed. 3. redesigning the menu and better food inventory management - Redesigning the food menu will focus on reducing wastage of food purchases, since it will narrow down the choices that the present wide menu offers. Moreover, a better management of food inventory will reduce costs on food, since this will reduce spoilage. 4. the manager's wages are different from that of the workers' wages - As previously assumed by the consultant, a new manager will improve store operations without an increase in the present expenses on the manager's salary and benefits. Moreover, it is important to assume that the manager's salary is separate from that of the workers' wages, since the consultant assumed that the workers' wages will be that of a fixed percentage from the restaurant's sales. C. Business and economic reasons why actual expenses might be significantly higher or lower than budgeted expenses 1. prices of food inputs - The consultant budgeted that food inputs will be approximately 45% of sales. This, however, will be a very volatile assumption, as the price of food inputs may rapidly change, depending on the prevalent economic conditions within the city or the state. Thus, the actual expenses might vary from that of the budgeted expenses, depending on the changes in the price of the food inputs. 2. optimal manpower complement - The budgeted expense for the worker's wages was actually on the conservative side, since it budgeted more than expected. Looking at the income statement from last year's operations, the worker's wages were only at 27% of sales, as compared to the budgeted 40% of sales for this year. If the idle times of the workers were to be significantly reduced, then the actual expenses for the workers' wages will be significantly lower than 40% of this year's sales. 3. optimal re-order policy - Better inventory management will certainly lead to lower food expenses. If the new manager devises an optimal re-order policy (in terms of quantity to be ordered, and in terms of the frequency of ordering), food spoilage will definitely be reduced, as well as ordering costs from the food suppliers. Thus, food expenses will be significantly lower, depending on how well the new re-order policy is implemented. The Far Horizon, A Sole Proprietorship Budgeted Income Statement Six Months Ended June 30, 2001 Section IV - Forms of Business Organization A sole proprietorship is a type of business entity which is carried on by the owner "without using a separate legal entity or arrangement" (McDonald). Thus, the owner of the business and the company itself are considered the same legal entity. With this, all debts of the business will also be debts of the owner. A general partnership "is a simple partnership structure made up of two or more people who wish to do business together" (Swelley). The arrangement is very much similar to a sole proprietorship, just that there are more owners involved in a partnership. Similarly, all owners will be liable for the business expenses and debts of the company. A corporation is a type of business organization where the business is a separate legal entity from the shareholders. Usually, the shareholders do not directly run the corporation, but they have a say during the election of the company's directors. The directors will be responsible "for the overall performance of the corporation" (McDonald). A limited liability company (LLC), is similar to partnerships and sole proprietorships, just that "in the event of a lawsuit, the company, not the owner, is held liable" (Wilson). This means that the company is liable for the business organization's debts, thereby limiting the liability of the owners in case of debts or lawsuits arising from the company's operations. Works Cited McDonald, Melanie. 17 January 2005. Ottawa Business Journal. 26 February 2007. < http://www.ottawabusinessjournal.com/288543277941105.php> Sweley, Maura Hallam. 11 July 2005. Kitsap Peninsula Business Journal. 26 February 2007. < http://www.kpbj.com/report/articles/2005-07-11-RPT-03.html> Wilson, Ashley. 16 January 2006. Inside Business - The Hampton Roads Business Journal. 26 February 2007. Read More