Introduction
Bottlieb Innovations, Inc. is a start up company that produces a product that will change the landscape of land assessment. Bottlieb’s Digital Geographer product, which uses patented technology to calculate the area of a walked circumference, is simple.
The marketing and financial strategies presented in this plan serve as a set of guidelines for management as the start-up company enters its first year of production. The plan employs the most conservative numbers and projections.
The Company
Bottlieb Innovations, Inc. is located in an industrial district of Escondido, CA. The approximately 1,500 square-foot, freeway-close facility includes office, workshop, and assembly space, as well as ample parking.
George S. Bottlieb (president and CEO) is responsible product design, sales, marketing, and overall business management. Jay Rosenburg Jr. is the vice president and shares responsibility for business management. He focuses on marketing, finance, and operations. Due to the small size of the company, both the president as well as the VP will initially need focus on tasks like product assembly, packaging, order process, and shipping. Other management personnel will be added as the company grows. To eliminate overhead and benefits, production personnel will initially be hired from temporary employment agencies.
The company will create a highly competitive bonus plan linked to exceptional company performance. The bonus plan, coupled with the opportunity to work for a company that has such tremendous growth potential, should help attract and retain key personnel.
The Product
The company has already developed and is in the process of manufacturing the Digital Geographer. This device will quickly calculate the area of a walk perimeter. The Digital Geographer has very few components so its manufacturing is expected to take little time.
There are no comparisons between Bottlieb’s Digital Geographer’s functionality and distance wheels from other manufacturers. The Digital Geographer makes complex area measurements simple. It used to require multiple measurements, extensive estimations and complicated geometric calculations. The Digital Geographer now requires you to be able to simply walk and push a button. The importance of accurate area measurement is well known by contractors. Better knowing the scope of a job can help to eliminate the costs associated with underestimating in a competitive market.
Bottlieb Innovations, Inc. manufactures its own products, and uses local vendors to provide materials and services. Bottlieb Innovations, Inc. owns molds that can be used to make plastic components like the wheel or encoder box.
Plans for a DG-3000 follow-on product are already in motion. The DG-3000 will use two wheels and a differential-based system, instead of an electronic compass, for determining directional changes. Bottlieb Innovations is currently developing future products. These will include software interfaces as well as future versions of the DG-3000, which could use a Global Positioning Satellite System (GPS).
Market
Analyses have shown that measuring wheels generate an average of $100M in global sales each year, with an average price of $50 (U.S. Dollars). This implies that approximately two million distance wheels are sold annually worldwide. Bottlieb Innovations projects that approximately one-third the market’s demand is due to customers needing to calculate area and distance, rather than distance measurement. If this estimate is correct, there may be demand for 600,000.+ units per annum in the area measurement segment.
If Bottlieb Innovations can capture 1% of this segment, the company will sell 6,000 units per year. The market’s potential is strong as long as customers are willing to change their buying habits and recognize the digital geographer’s superiority.
There are three major market segments in the distance-wheel industry:
- Construction, including engineering and small scale surveying.
- Agricultural, large-scale surveying.
- Niche.
Bottlieb Innovations targets current buyers between 10″ and 18″
Distance wheels are used in construction, surveying, and small-scale appraising industries. The Digital Geographer is targeted to buyers who use their digital distance wheels for measuring area. The majority of Bottlieb’s initial sales will be directly to customers in California’s fast-growing construction industry, but the company plans to swiftly expand its domestic and worldwide sales.
Bottlieb’, who invented the Digital Geographer, has no direct competitors. However, Bottlieb expects to sell the Digital Geographer to a significant portion of the current distance wheel market. Bottlieb can be considered one of the competitors in the current distance market: Rollertape. Measure Man. TruMeasure. Rollersure.
Distributors are the most common channel for distance wheel sellers. Some of the larger wheels are sold through agricultural supply distributors. Distributors manage product placement issues, as well the customer relations issues. Distance wheels are also sold at large retail home improvement chains (e.g. Home Depot
It is difficult to predict future growth in the measuring wheel industry due to the many privately-owned companies operating in it. Although worldwide growth in construction is a strong indicator that the market is growing, Bottlieb Innovations does not necessarily anticipate a unit sales growth in the measuring wheel industry over the next few years because it expects to gain market share from the existing market. Bottlieb’s growth depends less on the total market size expanding than it is on generating excitement and interest for the Digital Geographer.
Bottlieb expects direct advertising and product reputation to help increase market demand across the state, region, nation, and country over the next five years. Bottlieb Innovations is likely to be successful in domestic sales and have favorable Web-based sales.
Financial ProjectionsBottlieb Innovations’ sales forecast assumes constant, non-seasonal growth and an average revenue of $425 per unit. The Digital Geographer’s price will be driven by volume and the significant discounts our suppliers receive for higher volumes. If sales volume rises, it is possible to lower the price. We will not let the price drop to reduce our profit margin.
It is not possible to predict the exact number of customers who will pay for the Digital Geographer. We expect to increase production to 100 units per monthly within the first 12 months. If demand for the product turns out to be greater than expected, the facility in Escondido is capable of producing up to 500 units per month. The company is expecting to earn huge profits by Year 2.
1.1 Objectives
Bottlieb’, the management of the company, aims to make it profitable within a year of production starting. This will be in the early third quarter of Year 1. As production capacity increases, it can be quickly increased. If there is enough demand, it could be increased to 500 units per month at the existing facility.
Management’s challenge is to generate enough interest for the product in local and regional distance-wheel markets to reach sales of 100 units per month by the last month of Year1. This will ensure that the profitability goal has been met and will allow for further expansion to national and international markets.
1.2 Mission
Bottlieb Innovations is driven to ‘#8220;through constant innovation and creativity to extend the overwhelming potential of technology to practical and accurate, time-saving devices which enable increases in customer productivity. Bottlieb’s management believes this combination is essential to invent, market and produce breakthrough products.
Although the Digital Geographer is Bottlieb Innovations’ first and only product, the founder and management are constantly evaluating the market feasibility of a wide range of breakthrough product ideas.
The expected revenues from the Digital Geographer product can be used to improve future iterations, as well to fund future research and development in related fields.
1.3 Keys To Success
- Bottlieb’s Digital Geographer product is revolutionary and creates a new segmented market. Bottlieb’ s management has focused on existing distance-wheel buyers. This means that they need to convince those customers of the Digital Geographer’’s value.
- Quality products must be of exceptional quality as users’ experiences as well as word-of mouth advertising will drive the company’s reputation.
- Accurate production planning, cost controlling, and accurate budgeting are needed to ensure the financial health of the business.
- The temptation to concentrate only on growth, while neglecting profitability, must be avoided.