Job description Number Expected weekly wage
Production line workers 3 £175
Despatch driver 1 £150
Part time packer 1 £50
Clerical assistant 1 £150
MARKETING PLAN
Product
Vibe entertainments ‘presence’ loudspeakers (sold in pairs):
- matched pairs in high density chipboard laminate with moulded fascia
- attractive modern styling
- two colour way- black ash and light oak finish
- price £100 per pair (excluding VAT)
The product specification and price have been arrived at following market research among existing customers:
- questionnaire sent with products and mailings
- customers comments made during telephone conversations
The Market
- domestic use, supplied by hi-fi retailers and mail order houses
- total UK sales in 2005 £45m for similar units
- expanding market (10% in 2005) especially B, B1 and C2 social groupings
- Further growth in market forecast 7% p.a. to 2006 stimulated by demand from consumers for home and entertainment systems.
Vibe entertainments realistically expect to take 10% of the UK’s market in 2007.
The Competitors
Major names in the market are BEF, Rosedale, Session, M&W who take 80% of the current total UK sales. There weaknesses are:
- staid image
- high unit price – average of £115 for similar units
- slow delivery
We can gain market share by
- a bright modern image
- price cut in to £100 per unit
- rapid delivery to suppliers
- response after sales service
We also have the advantage of being a small company which is able to offer a more personal service to our customers.
Promotion
Promotion is by way of:
- monthly advertising of the hi-fi magazines
- mail shots to existing suppliers (quarterly from January 2007)
- purchase of product related mailing list (January)
- Sandeep visiting retailers and mail orders to houses
- Sending the speakers for review to the hi-fi magazines
Distribution and sales
Distribution of the speaker units is in sealed cartons direct to hi-fi retailers and mail order outlets. No wholesalers are involved.
Vibe entertainment is purchasing a van for local and urgent deliveries, it also has a contract with a carrier spread direct which offer a 24hr a 3day delivery service within the UK
Marketing Budget
In the first 12 months the marketing budget has been estimated at £12000 this will cover
- Advertising costs in magazines
- Mailing
- Purchased or the sales and purchasing of the mailing list
- Postage related to mailing list
In addition £1800 has been budgeted for posting and delivery costs
Sales projection
Expected turnover for the first 12 months, based on the sales of 4,800 units: £48000
Sales break even figures:
£145,275 (total overheads) x 100 = £345,892
42% (gross profit margin %)
Sales of units needed for breakeven = 3,459
Vibe entertainments are confident of achieving this level of sales (72% of annual projected sales) in view of the existing good name of the speakers and the current demand shown in the order books.
PEST ANALSYS
A PEST analysis is also sometimes called STEP, STEEP or PESTLE analysis. It looks at the external business environment. Pest stands for:
Political
Economic
Social
Technological
These are all elements that may have an effect on our future business.
Political factors – can have a direct impact on the way the business operates. Political factors also include issues that affect your product line. The political arena has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses. You may need to consider issues such as:
How stable the political environment is
Will government policy influence laws that regulate or tax your business
What is the government's position on marketing ethics
What is the government's policy on the economy
Does the government have a view on culture and religion
Influences might include:
- Change in tax structure
- Privatization
- Trade union
- Changes in availability of raw materials
- Duties and levies
- Regulatory constraints, such as labeling, quality, safety
Economic factors – include current financial forces on your target market.
Influenced by domestic economic policies
World economic trends
● Growth
● Inflation
● Consumption patterns
● Income distribution
Influences might include:
- Inflation
- Unemployment
- Energy prices
- Price volatility (could suddenly change)
Social factors - include changes in social trends, fads, or demographic groups as they affect your target market and its current opinions. This could include changes in shopping habits, such as the increase in online shopping or the super-mall trend. It could also include the aging of your current target market, or the population increases in the over-50 group.
Factors might include:
- Consumer lifestyles
- Environmental issues
- Demographical issues
- Education
- Immigration
- Religion
Technology factors - include everything that affects your product, its market, or information-gathering efforts of your market that come as a result of changes in technology.
Factors might include:
- New technological process
- Energy saving techniques
- New materials/substitutes for existing materials
- Better equipment
- New product development
PRODUCTION PLAN
Vibe entertainment will manufacture pair of ‘Presence’ speaker units in a power saw and welding production line set up in their freehold premises. Three production line workers will produce 400 pairs of speakers per month.
The units will be packed on site in double- walled cartons with high-density moulded filling pads.
The units will be dispatched from the premises either in the company van or collected by carrier.
The business will be administered from the premises by the two directors and clerical assistant. An office will be set up on the premises.
All health and safety at work conditions will be met.
Premises
Freehold factory
Vibe entertainment limited will operate from:
Unit 21
Lawden road
Bordesley
Birmingham
B10 0AB
Freehold premises of 2,500 square feet
Purchase price £125,000
Professional valuation £127,000 (November 2006)
Business rates £2,900 p.a
No mortgage currently outstanding
Financed by capital and proposed £50,000 bank commercial mortgage
Machinery
Production Line
Vibe entertainment will purchase power saws and other production machinery:
Cost: £45,000
Expected life: 5yrs (20% straight line depreciation)
Financing: from capital
Vehicle
Vibe entertainment will purchase a delivery van:
Cost: £12,500
Expected life: 4yrs (25% straight line depreciation)
Financing: from capital
Raw materials
Speakers units
Vibe entertainment purchase high quality bextrene cone individual speaker units for building into the ‘presence’ cabinets
Supplier is R&T of Cambridge.
Cost of the individual units is £20 (£40 per pair)
At present terms are cash, but from February 2007 terms will be 30 days credit.
Speaker cabinets
Vibe entertainments purchase high quality chipboard laminates, internal bracing and filling from two suppliers.
Total cost of materials per pair of speakers is £20
At present terms are cash, but from February 2007 terms will be 30 days credit.
Total materials cost per pair of speakers: £60
Average stock to be held is £10,000
Labour costs
The total annual labour budget is £43,750, calculated on the basis of employing the following for a 50 week year:
3 production line workers @ £175 per week
1 part time packer @ £50 per week
1 despatch driver @ £150 per week
1 clerical assistant @ £150 per week
QUALITY POLICY
Strict quality control procedures are at present in operation for materials purchased and for finish products in respect of physical finish and sound reproduction.
Quality assurance includes a benchmarking exercise against BEF Plc and regular team meetings. Vibe entertainments are at present investigating its overall systems with a view to application for Quality Assurance registration through BS EN ISO 9000 in 2006.
RESOURCES REQUIREMENTS
Resources required
Item Cost (£)
Freehold premises 125,000
Production machinery 45,000
Office equipment 12,500
Vehicle 12,500
Material and working capital 40,000
TOTAL 235,000
Financial requirements
Item Finance (£)
Freehold premises 50,000 commercial mortgages
Production machinery 20,000 business loan
Stock/working capital 40,000 overdraft
TOTAL FINANCE REQUIRED 110,000
CONTRIBUTION FROM OWN RESOURCES 125,000
TOTAL 235,000
Commercial mortgage with annual repayments of capital and interest requested
Business loan with first year interest only repayments requested
Assets available for security
Security Value (£)
Freehold premises 127,500 (valuation Nov.2006)
Other fixed assets 70,000 (at cost)
Name of business: Vibe Entertainment limited
Period: January – December 2007
PROJECTED TRADING AND PROFIT AND LOSS ACCOUNT OF VIBE ENTERTAINMENT LIMITED FOR THE YEAR ENDING 31ST DEC 2007
PROJECTED OPENING BLANACE SHEET OF VIBE ENTERTAINMENT LIMITEDAS AT 1ST JANUARY 2007
BALANCE SHEET OF VIBE ENTERTAINMENT LIMITED AS AT 31ST DECEMBER 2007
IMCOME STATEMENT FOR VIBE ENTERTAINMENTS FOR YEAR ENDING DECEMBER 2007
MONITORING AND EVALUATING RESULTS
Sales
Sales figures will be critical in the first year of trading. Sales figures will be reported to the directors on a weekly basis for discussion. The monthly sales budget will be completed promptly and any variances investigated and action taken accordingly.
Competitors’ sales and national trends will be monitored and market share calculations for vibe entertainment completed six monthly.
Cash flow forecast
Monthly figures will be recorded and compared with forecast figures and inspected by the directors.
If the results fluctuate significantly the situation will be investigated and the forecast redrafted.
The cash flow forecast will be spreadsheet based.
Operating budget
An operating budget will bet set up on a computer spreadsheet.
Monthly figures will also be extracted from the computer system and compared with the projected monthly equivalent from the forecast.
Year to date, figures will also be calculated and compared with the forecast. The directors will investigate significant adverse and positive trends and take action accordingly.
All monitored figured will be supplied to a lender on request.
Performance indicators
Figures will be taken from the forecast financial statements on the computer to calculate:
- Gross profit percentage
- Net profit percentage
- Return on capital employed
- Current ratio (as %)
- Liquid ratio (as %)
FORECAST INCOME STATEMENT FOR YEARS TWO AND THREE
FORECASTE BLANCE SHEET FOR YEAR TWO AND THREE
BIBLIOGRAPHY
Fardon M 2000 ‘Advanced business’ Osborn, Great Britain
[Accessed: march 2007]
