CAP Business Plan

Lycoming College Business 441 W

Business Plan

Colton Dershem and Anh Phan

1

Table of Contents Executive Summary .................................................................................................................................... 3

Company Description ................................................................................................................................. 5

Industry Analysis ........................................................................................................................ 7

Industry Size, Growth Rate, and Sales Projections ........................................................................ 7

Industry Characteristics and Structure.......................................................................................... 9

Nature of Participants ...............................................................................................................10

Key Success Factors .................................................................................................................14

Industry Trends .......................................................................................................................15

Long Term Prospects ................................................................................................................16

Market Analysis ........................................................................................................................17

Market Segment.......................................................................................................................17

Target Market Size ...................................................................................................................18

Buyer Behavior .......................................................................................................................19

Competition Analysis ...............................................................................................................20

Estimate of Annual Sales and Market Share ................................................................................21

Marketing Plan ..........................................................................................................................23

Overall Marketing Strategy .......................................................................................................23

Positioning ..............................................................................................................................24

Product Attribute Map ..............................................................................................................24

Pricing Strategy .......................................................................................................................25

Promotional Activities ..............................................................................................................26

Annual Marketing Budget .........................................................................................................27

Management Team and Company Structure ...............................................................................28

Management Team ...................................................................................................................28

Skills Profile and Gaps in Management Team .............................................................................28

Ownership and Compensation ...................................................................................................29

Other Professionals ..................................................................................................................30

Organizational Chart ................................................................................................................31

Job Descriptions ......................................................................................................................32

Company Culture .....................................................................................................................33

2

Operations Plan .........................................................................................................................34

Operations Model and Procedures ..............................................................................................34

Business Location ....................................................................................................................35

Manufacturing .........................................................................................................................35

Distribution .............................................................................................................................36

Timeline .................................................................................................................................36

Challenges and Risks ................................................................................................................36

Intellectual Property .................................................................................................................37

Financial Projections .................................................................................................................38

Statement of Sources and Uses of Funds .....................................................................................38

Assumptions Sheet ...................................................................................................................39

Income Statement 2016 (First Year of Business) ..........................................................................43

Income Statement 2017 (Second Year of Business) ......................................................................44

Income Statement 2018 (Third Year of Business) ........................................................................45

Balance Sheets ........................................................................................................................46

Statement of Cash Flows ...........................................................................................................47

Ratios .....................................................................................................................................47

Appendices ................................................................................................................................48

First Screen .............................................................................................................................48

Concept Statement ...................................................................................................................57

Concept Statement Feedback .....................................................................................................58

Consumer Survey and Analysis .................................................................................................61

Company Logo ........................................................................................................................65

Design ....................................................................................................................................66

Website ..................................................................................................................................67

Facebook ................................................................................................................................68

Works Cited ..............................................................................................................................69

3

Executive Summary

Introduction

The growth rate in 2013 for office supplies (including paper and other products) was 4.9 percent.

The industry’s growth has been driven by younger students because of educational enrollment.

Also, the industry relies on large office buildings which use the supplies rapidly. However, there

is a gap in the market because the only current offerings for pens include writing purposes. CAP

plans on filling that gap in New York City by opening a pen company that offers flavor infused

plastic pens.

Company Description

CAP is proposing to operate a 160 square foot office in Newark, New Jersey, which is only a

small commute away from New York City. New York City is an ideal location to do business

because there is a large population of college students. The company plans on selling pens that

are infused with flavor in order to give the customer an exciting and new experience.

Industry Analysis

CAP will compete in the “Office Supplies (except Paper) Manufacturing” industry (NAICS

3339940 and SIC 3951). The industry is comprised of office machines, marking devices, art

goods, and writing instruments. The largest segment of the industry is art goods, which embodies

33 percent of industry revenue. Pen and pencils ranks second with 24 percent of revenue.

Recognized companies in the industry included 3M, BIC, and Pilot.

Market Analysis

CAP’s target market consists of college students around the ages of 18-24 in New York City who

might be stressed and nervous about their academic workloads and try to find the way to relieve

those negative emotions. However, the target market also includes non-traditional students that

may be older than 24. The following table represents CAP’s projected sales revenue and market

share for the first three years of operations.

Year Market Share Unit Sold Sales Revenue

2016 7.2% 149,000 $ 445,510

2017 10.5% 223,800 $ 669,162

2018 13.3% 292,000 $ 873,080

4

Marketing Plan

The overall goal of CAP’s marketing is to make customers aware of our product and its benefits.

CAP’s approach will be through the use of social media and point of sales advertising. The social

media platforms will include a website, Facebook, Twitter, and YouTube. Points of display

advertisements include flyers, cardboard cut outs, and free samples.

Management Team and Company Structure

CAP’s management philosophy is based on customer service and open communication. CAP

strives to show attention to the customers but also make the work environment fun at the same

time. CAP will be start as a two member team, which includes the CEO and cofounder, Colton

Dershem, and the CFO and cofounder, Anh Phan. The team plans on hiring a CMO in the third

year as market share increases.

Operations and Development Plan

CAP will operate out of a fully functioning office space that is 160 square feet. The office space

was extensively analyzed and was proven to be the best location because of the proximity to the

consumers and suppliers. CAP plans on sacrificing extra space in order to cut down expenses.

The product will be sold through campus stores in the New York City area.

Financial Projections

The business plan includes a full set of pro forma income statements, balance sheets, and a

statement of cash flows for the first three years of operations. CAP is expecting no sales revenue

for the first two months in order for the manufacture to create our product. CAP’s sales are

expected to increase 3 percent each year to match with the 3 percent annual growth of the U.S.

Office Supplies Manufacturing Industry. CAP expects a net loss of $45,861 in the first year, a

net income of $13,251 in the second year, and a net income of $54,236 for the third year.

Overall, the company will remain cash flow positive throughout its startup period.

Funding sought

The company is seeking a $50,000 investment.

5

Company Description

Introduction

CAP is proposing to manufacture and distribute toxin-free plastic pens with the plastic infused

with flavors. While offering new flavor experiences, the product is safe for customers to chew on

in order to relieve stress and negative emotions.

CAP’s cofounders are Colton Dershem and Anh Phan, who are both seniors majoring in

Business Administration at Lycoming College.

Company History

In the spring 2015 semester, Colton and Anh noticed that there were many students chewing on

their pencils and pencils in class. They then thought to themselves, “Why doesn’t a company

make a product that caters to solve this problem?” If people are already chewing on their pens

and pencils, why not make a product that can exploit the market? At this time Colton and Anh

completed a feasibility analysis, which validated the idea for the product.

In January 2016, CAP is incorporated. CAP stands for Colton & Anh Pen, Inc. The company is

headquartered in Newark, New Jersey and sells products targeted towards college students in

New York City.

Mission Statement

The mission of CAP is to provide its customers with products that are safe in a distinct

experience that previously was unknown.

Tagline

The company’s tagline, which will be important for future branding strategies, is “When you’re

stressin’ out, just chew it out.” The tagline came about when the founders, Colton and Anh, were

brainstorming benefits of the suggested product. There are multiple instances of research that

suggest chewing on things helps cognitive abilities and relieve stress1. Therefore, this tagline

gives a brief example of what the product can do for you.

Product

The product design of CAP is strongly guided by its own target segment. The unique features

that differentiate CAP’s product are toxin-free materials and flavorful plastic. There were two

steps that CAP took to properly determine the target segment’s interests and preferences. First,

CAP distributed its concept statement to professionals, who have expertise in investing,

accounting, and advertising, to seek for advices. Secondly, CAP conducted a survey from a

sample of 30 college students at Lycoming College.

1 Smith, Andrew. "Effects of Chewing Gum on Cognitive Function, Mood and Physiology in Stressed and Non-

stressed Volunteers." Nutritional Neuroscience 13, no. 1 (February 01, 2010): 7-16.

6

Based on the results of these two steps, CAP will manufacture and distribute the product with the

following functions:

● The plastic of CAP pen is toxin-free and allows customers to chew on it to relieve stress

and nervousness without being exposed to poisonous materials.

● The plastic of CAP pen is infused with the variety of flavors to provide customers with

new experiences when they chew on their pens.

● There are variety of flavors, including coffee, fruits, and mint, that are signified by a

variety of colors. This is also for personal interests and preferences.

● Two major ink colors are black and blue.

Funding Sought

As described in detail in the business plan, CAP is seeking $50,000 in investment capital.

Legal Status and Ownership

CAP is a Limited Liability Corporation incorporated in the state of New Jersey. It is currently

owned by its founders but equity will be given up for an investment in our business. A detailed

schedule of ownership is provided in the “Management Team and Company Structure”2 section

of the plan.

2 CAP, “Management Team and Company Structure,” 2015.

7

Industry Analysis

Industry Definition

CAP is classified under “Office Supplies (except Paper) Manufacturing” industry with the

NAICS code of 339940. The associated SIC code is 3951, which represents pens and mechanical

pencils. The industry is comprised of office machines, marking devices, art goods, and writing

instruments. The largest segment of the industry is art goods, which embodies 33% of industry

revenue. Pen and pencils ranks second with 24 percent of revenue. Major products include pens,

pencils, markers, crayons, chalk, modeling clay, and staplers. Major U.S. based companies

include 3M Company, ACCO Brands, and AT Cross. Two major international brands are BIC

(France) and PILOT (Japan).

Industry Size, Growth Rate, and Sales Projections3

United States offices services & supplies market value: $billion, 2009-2013

2009 2010 2011 2012 2013

Industry Market

Value

$82.5 billion $82.9 billion $84.8 billion $86.7 billion $91.0 billion

Industry Growth

Rate

- 0.5% 2.2% 2.3% 4.9%

Source: MarketLine, Jan 31, 2015

4

3,

4 "Office Services & Supplies Industry Profile: United States." MarketLine, October 1, 2014, 1-31. Accessed

January 31, 2015.

8

The United States office services and supplies market value had a significant growth of 4.9

percent to $91.0 billion in 2013. MarketLine reports that the compound growth rate for the

period from 2009 to 2013 was 2.5 percent, which was the moderate growth rate5. Significant

sales increase in 2013 was the reason for the overall betterment of the industry.

Industry Sales Projections

United States offices services & supplies market value forecast: $billion, 2014-2018

2014 2015 2016 2017 2018

Industry Market

Value

$92.3

billion

$93.4

billion

$95.9

billion

$97.7

billion

$99.4 billion

Industry Growth

Rate

1.5% 1.2% 2.6% 1.9% 1.7%


According to MarketLine, from 2014 to 2018, the United States office services and supplies

market value is expected to reach $99.4 billion, which represents 9.3 percent increase since 2013.

5,

6"Office Services & Supplies Industry Profile: United States." MarketLine, October 1, 2014, 1-31. Accessed

January 31, 2015.

9

The compound annual growth rate for this period is expected to be 1.8 percent. This industry is

therefore stable with moderate growth rate.

Source: Hoover’s, Jan 31, 20157.

Summary

The industry is in the matured phase of its life cycle with a steady growth rate. The U.S. “Office

Supplies Manufacturing” industry includes 919 companies with the total revenue from writing

instruments at 5.5 billion U.S. dollars in 2013. The actual growth rate in 2013 for office supplies

(including paper and other products) was 4.9 percent8. The growth rate for this specific industry

is expected to be at 1 percent for the next four years. Two key factors that drive the demand are

educational enrollment levels and growth of small businesses and home offices. For small

businesses in the industry, specialized products and superior craftsmanship are major competitive

advantages. Businesses in this industry have many challenges because this is a highly

competitive field that requires constantly developing new product lines. Moreover, material price

fluctuations and the nature of the industry make it difficult for firms to raise the price while

maintaining competitive advantages. Firms in this industry are also facing the risk of the new

trend where technology is replacing some office supplies.

Industry Characteristics and Structure

The industry is highly concentrated with the top fifty largest firms accounting for 75 percent of

the market sales. The top five companies within the industry include 3M Company (U.S.), The

Bidvest Group LTD (South Africa), Compagnie Financiere Richemont SA (Switzerland),

Kyocera Corporation (Japan), and R.R. Donnelley & Sons Company (U.S.)9. Demand is strongly

driven by educational enrollment levels and growth of small businesses and home offices. For

both the U.S. and international corporations, the profitability of individual companies depends on

efficient operations and effective marketing10

. Large corporations are heavily dependent on

economies of scale in order to operate effectively. Smaller operators tend to compete through

7 “Office, School & Art Supplies Manufacturing.” Hoovers. 2015. Accessed January 31, 2015.

8, 9, 10 "Office Services & Supplies Industry Profile: United States." MarketLine, October 1, 2014, 1-31. Accessed

January 31, 2015.

10

specialized products and superior craftsmanship.

Other structural characteristics for the Office Supplies (except paper) and Manufacturing

industry include the following:

● Steady growth, low barrier to entry, low brand loyalty, and easy access to suppliers and

distributor are reasons that invite many new firms to enter the industry. Therefore, the

competition and the level of rivalry are strong among firms11

.

● Companies usually outsource some or all of their manufacturing activities to foreign

firms in Asia, especially those in China, for low-cost manufacturing and raw materials

sourcing.

● The manufacturing process relies on information technology systems for operations,

supply chain management, sales, and other support functions. Technology is the key for

product development and efficiency.

Nature of Participants12

The industry has a variety of participants that are manufacturing different products. These

products are pens, pencils, markers, crayons, chalk, modeling clay, and staplers. Firms price their

products based on quality and the level of specialization. There are large multinational

corporations with thousands of employees and there are also small proprietorship firms that

produce for local demand. 3M Company, an American-based corporation, is the largest company

with annual sales of $31.8 billion and a gross profit margin of 48.31 percent in 2014. Compagnie

Financière Richemont SA is a jewelry corporation from Switzerland that produces high-end

luxury writing instruments. This company had $14.66 billion in sales and a gross profit margin

of 63.40 percent. The Bidvest Group LTD from South Africa had sales of $15.23 billion and a

gross profit margin of 23.12 percent in 2014. A profit margin for these three companies reflects

their operational structures. Bidvest Group is a wholesale corporation; therefore a gross profit

margin is around 20 percent. 3M Company is major office supplies manufacturers with 48.31

percent. The highest gross margin is Compagnie Financière Richemont SA with 63.40 percent

since the company produced luxury jewelry, and writing instruments.

Segmentation

The industry can be segmented in two ways: product category and geographic segmentation.

Writing instruments account for 9 percent of the global offices service and supplies market. The

total market value of the entire industry was $216 billion in 201313

. If paper-based products are

excluded, Art Goods accounts for 33 percent, Pen and Mechanical Pencils accounts for 24

11

"Office Services & Supplies Industry Profile: United States." MarketLine, October 1, 2014, 1-31. Accessed

January 31, 2015. 12

“Office, School & Art Supplies Manufacturing.” Hoovers. 2015. Accessed January 31, 2015. 13

Ibid.,

11

percent, Marking Devices accounts for 16 percent, Lead Pencils accounts for 6 percent, and

Other products takes up the final 21 percent. CAP’s product is a flavorful and toxin-free pen,

which will be classified under Pen and Mechanical Pencil segment. The value of the writing

instrument segment in 2013 was $19.4 billion and as previously stated, accounts for 9 percent of

the global sales. For the United States, the total market value for writing instrument was $5.5

billion, which means the market accounts for more than 28 percent of global writing instrument

sales. On the other hand, the industry can be segmented geographically. The largest market for

the Office Supplies Manufacturing industry is the United States with the total market value of

$91 billion, which accounts for 42.1 percent of global market share14

.

Revenue by Products - US Census Bureau

Source: Hoover’s, Jan 31, 201515

.

Global office services and supplies market category segmentation: % share, by value, 2013


.

14

“Office Services & Supplies Industry Profile: United States." MarketLine, October 1, 2014, 1-31. Accessed

January 31, 2015. 15

“Office, School & Art Supplies Manufacturing.” Hoovers. 2015. Accessed January 31, 2015.

12

United States office services and supplies market category segmentation, % share, by value,

2013

United States office services and supplies market geographically segmentation: % share, by

value, 2013


.

16


January 31, 2015. 17

Ibid.,

13

Ratios

Important numbers and ratios have been collected to further analyze the industry.

Company Benchmark Information of companies within the “Office Supplies (except Paper)

Manufacturing” industry:

Company Size All Large Medium Small

Size by Revenue Over $50M $5 - $50M Under $5M

Company Count 919 7 95 817

Net Sales 100% 100% 100% 100%

Gross Margin 57.9% 59.5% 56.5% 58.0%

Operating Income 5.7% 6.3% 5.5% 5.4%

Net Income 2.8% 2.9% 2.7% 2.6%

EBITDA to Sales 9.0% 10.1% 8.6% 8.2%

Net worth 50.9% 64.1% 45.6% 37.9%

Current Ratio 2.41 3.03 2.32 1.89

Inventory Turnover x1.68 x1.44 x1.81 x1.86

Working Capital to Sales 25.4% 34.1% 22.8% 18.3%

Account Payable to Sales 10.8% 9.1% 10.6% 13.2%

Source: Hoover’s, Jan 31, 201518

.

Most of the companies in the industry will be classified with the value under $5 million. While it

is stated that the fifty top companies holding 75 percent of the market, major competitions will

be among smaller firms at a local level. In the income statement, operating expenses are the main

concern because they account for more than 50 percent of sales value. Companies should tightly

control their operating expenses because the industry has high gross margin and moderate net

income. Moreover, the debt over asset ratio is 50 percent, indicating the large amount of liability

for the industry. For small businesses, a high debt ratio means it will be difficult to obtain credit.

The low inventory turnover means that companies tend to have a lot of inventory on hand. This

will be risky if the business needs cash and capital immediately.

18


14

Key Success Factors The key success factors of this industry are as follows:

● Location and Income: Since buying power is sustained by low customer loyalty, low

level product differentiation, and high price sensitivity, customers can easily choose

different brands19

. Therefore, it is crucial for businesses in this industry to display their

products in the high-traffic areas, such as business districts or university campus stores in

order to make the products more appealing and convenient for customers. On the other

hand, the populations who live in these areas tend to have higher income. They will be

willing to pay more for quality products.

● New product development: As this is a highly competitive industry, companies must

constantly innovate new and interesting products to entice consumers. Although the

demand can be predicted, consumer preferences change frequently. Disappointing

product lines can cause excess inventory and reduce overall profit margin. Companies

therefore must invest into product development to differentiate and stay competitive.

● Price: High price sensitivity causes customers’ to switch to different products20

. This is

true for all companies, except companies that produce premium and luxury products in

this industry. Raising the product price could result in a substantial loss in the amount of

customers.

● Manufacturing technologies: In the industry, it is essential to be operational efficiency.

Companies rely on IT management for operations, plan and control inventory, supply

chain, and sales21

. Economies of scale ensure low production costs and reduce the

amount of excess products.

● Effective marketing and promotion strategy: As the industry is highly competitive with

many participants, an effective marketing plan to promote the product, especially at the

beginning, is crucial. If the product can create a trend, it will attract customers and

maintain brand loyalty. It will be an excellent idea to let customers test the product for

fee or a discount in the early stages.

● Quality control: For this specific industry, most companies will outsource their

productions to a third-party manufacturer. Usually, these manufacturers are located in

developing countries, such as China, India, Brazil, and Mexico. However, it is crucial for

the company to oversee and control product quality because defect products can cause

reputational damages, which will in turn reduce profit.

19


January 31, 2015. 20

Ibid,. 21


15

Industry Trends There are several environmental and business trends influencing the development of Office and

Supplies Manufacturing industry. They are as follows:

Trends that Favor the Industry

● Innovative products can enhance brand awareness and recognition, which in turn attracts

new customers and establishes brand images.

● The Obama Administration is considering to ease the patent process, which means it is

now easier to obtain governmental protection on inventions22

.

● With the United States economy is recovering, businesses are more confident to expand,

which will result in more office supplies consumption. On the other hand, an improving

economy improves customers’ earnings and people are able spend more. U.S. personal

income, which drives the demand for office supplies, rose by 4.6 percent from December

2013 to December 201423

.

● Parents and students are willing to invest more for educational purposes. Back-to-school

items sales has a steady growth, and customers will pay substantially more compared to

the previous year24

.

● Seasonal sales influence the success of the industry. Major sales occur during the third

and the fourth quarter, which is when educational sales take place.

● Current low oil price leads to a lower plastic price. Cheaper raw materials then leads to a

cheaper finished good

Trends Working Against the Industry

● Technology is replacing some office supplies. With mobile devices and computers,

people can complete tasks without using pens, pencils, and paper25

.

● A growing concern on environmental issues requires businesses in the industry to comply

with many new regulations, as well as manufacturing environmentally friendly products.

● Customers constantly change their preferences. This leads us to believe that it will be

difficult to predict the market demand.

● The industry is dependent on raw materials, including plastic, steel, and ink. Material

price fluctuations can cause serious issues for operations26

.

22

Favole, Jared. "Obama Administration Takes Steps To Ease Patent Process." Wall Street Journal, February 20,

2014. Accessed February 13, 2015 23, 25, 26


Gustafson, Krystina. "Expect to Spend More on Back-to-school This Year: NRF." CNBC, July 17, 2014. Accessed

February 7, 2015.

16

Long Term Prospects The industry will have a low demand for the next six months because the academic year will

start until August. Moreover, calendar year-end purchases from business also contribute to the

significant earnings. Although the industry growth for the U.S. market in 2014 was higher than

expected, at 4.9 percent, annual growth might not exceed 3 percent. However, college enrollment

has increased over the last ten years. A higher population of college students will be a long-term

positive trend for the industry27

. Young generations demand new and interesting products that

require companies to be innovative. The fundamental manufacturing principal that is based on

economies of scale might be changed. Instead, specialized products with superior features are

likely to benefit.

On the other hand, CAP believes that writing instruments are not expected to be replaced by

high-technological products in the near future. As CAP Consumer Survey shows that 93 percent

of students are using pens and pencils daily, there are demands for the product. Even if the

domestic market declines, corporations can move to emerging markets that are underserved28

.

According to BBC, fountain pen sales are currently increasing significantly. This is believed to

be caused by people considering fountain pens as an accessory, rather than a tool. This news

opens a totally new trend for pen manufacturers29

. For example, corporations with premium and

luxury pen products can expect to see their sales increase in the future.

27

"Enrollment." National Center for Education Statistics. 2015. Accessed March 3, 2015 28


Brocklehurst, Steven. "Why Are Fountain Pen Sales Rising?" BBC News Magazine, May 22, 2015. Accessed

March 7, 2015.

17

Market Analysis

Market Segment

CAP will target college students in New York City who might be stressed and nervous about

their academic workloads and try to find the way to relieve those negative emotions. With

approximately 700,000 college students, New York City has a large population of potential

customers for CAP’s product (source).

● Geographically: CAP targets New York City.

● Demographically: CAP targets the college students’ population.

● Psychographically: CAP targets college students who frequently experience stress and

negative emotions. Also, CAP targets college students that currently chew on their

writing utensil. Research shows that 45% of teenagers are nail biters and they require an

object to chew on30

. On the other hand, other research shows the correlation between

chewing gum and sustained attention31

. For instance, chewing gum will help students to

study better. Therefore, CAP offers a toxin-free pen as an option for these students to

relieve their negative emotions and stress to work more effective. In additional, with

various flavors, the product will entice students because young people are always

interested in unique and creative product.

● New York City has largest population and the highest per capita personal income in the

United States. According to the Bureau of Economic Analysis32

, New York City has

capita personal income of $121,632 in 2013, which is ranked 1st in the United States. It is

272 percent of the national average, which is $44,765. In general, New York City citizens

can afford to purchase premium and expensive products.

● New York City is the city with the largest population of college students. There are

approximately 671,743 students33

who are attending at colleges and graduate school. This

is the largest student population in the United States.

● Industry analysis. The research found no direct competitors for CAP, which means CAP

has the first mover advantage if the product is introduced to the public. Moreover, young

customers demand innovative and interesting products. There is a strong possibility that

customers will have a positive attitude towards CAP’s product.

30

Leung, Alexander. "Nailbiting." Clin Pediatr 29, no. 12 (December 1990): 690-92. 31

Smith, Andrew. "Effects of Chewing Gum on Cognitive Function, Mood and Physiology in Stressed and Non-

stressed Volunteers." Nutritional Neuroscience 13, no. 1 (February 01, 2010): 7-16. 32

"New York, New York." Bureau of Economic Analysis. November 20, 2014. Accessed March 7, 2015. 33

"New York (city), New York." United States Census Bureau. 2014. Accessed March 7, 2015.

18

Target Market Size CAP’s target market consists of college students in New York City. Based on Census data

34,

CAP’s calculations on target market size are as follow:

Geographic: There are 8,268,999 people in New York City according to the 2013 Census data.

Demographic: Among 8,268,999 people, there are 509,763 individuals who are undergraduate

college students. Moreover, there are 161,980 individuals attending graduate and professional

schools. Therefore, the total population that can be CAP’s target market is:

509,763 + 161,980 = 671,743.

Psychographic: Although the original idea is to provide an alternative for chewing habits, CAP

does not want to limit the population within 45 percent of students who are nail biters. Instead,

CAP considers the percentage of college students who are under stress and negative emotions

frequently. According to the Anxiety and Depression Association of America35

, anxiety

disorders are one of the most common health issues with college students. They estimated that

there approximately 80 percent of college students frequently or sometimes experience daily

stress. The margin of error is +/- 3.0 percent. CAP will consider 77 percent of the population as a

target market. Therefore, the possible total target market size will be:

671,743 * 0.77 = 517,242.

Total value of the target market in dollars for the first year: As retail price for each individual

pen will be at $2.99, CAP expects students will purchase at least two pens for each semester.

There are two semesters. Therefore, the total value for the first year will be:

517,242 * 2.99 * 2 * 2 = $6,186,215.

Total value of the target market in dollars for the next three years: According to MarketLine36

,

the growth expectation for the next two years for the industry will be at 1.9 percent and 1.7

percent. However, in 2013, the growth suddenly increased to 4.9 percent. It can be explained by

the improvement of the United States economy. As the United States economy is predicted to

grow at 3 percent in 201537

, CAP believes that for the next two years, the industry growth will be

better. Second year and third year will have the growth rate at 3.0 percent. Total value in dollars

for each individual year will be:

Year 1 (2016): $6,186,215

Year 2 (2017): $6,186,215 * 1.03 = $6,371,802

Year 3 (2018): $6,371,802 * 1.03 = $6,562,956

34

"New York (city), New York." United States Census Bureau. 2014. Accessed March 7, 2015. 35

"College Student Facts." Anxiety and Depression Association of America. 2015. Accessed April 2, 2015. 36


January 31, 2015. 37

AP. "Why the US Will Power the World Economy in 2015." CNBC, December 30, 2014. Accessed February 7,

2015.

19

Buyer Behavior The following factors could influence the customers’ behaviors and purchasing powers:

● Pen use: The basic function of CAP’s product is a writing tool. If students prefer using

technological devices, such as smart phones and laptops, to write their work and do not

want to carry a pen around, this will be a critical issue for CAP. As mentioned above,

technology advancement is a trend that requires an innovative product.

● Undifferentiated products: It is difficult for the target market to recognize the differences

between pen brands. If the pen serves solely for the purpose of writing, students can

basically purchase a random pen brand that is selling from general retailers. If CAP’s

product cannot be differentiated, the target market will not be loyal to the brand.

● Price: CAP will be classified as a premium product because it is selling at a higher price

than general pens. The target market is college students, who have less income in

comparison with those who are currently in the workforce. There is a likelihood that the

target market cannot afford to buy CAP’s products since there are many cheaper pen

brands and customers can easily switch.

● Willingness to try the product: Since CAP is a new and innovative product, it is important

to persuade the target market to try it. This is one of the most critical issues because CAP

will not be successful if the product is refused by the target market.

● Health concern: CAP’s product will be made as a toxin-free pen. This advantage might

be ignored by the target market due to the impact of price. On the other hand, if CAP

cannot persuade the target market that the product is safe for chewing, the company will

lose this point of selling.

● Chewing habits: The product can be misunderstood by the public. College students and

their parents might perceive the product as a tool that encourages the chewing habit. If

the opposition is strong, it can cause serious reputational damage to CAP.

● Flavor preferences: The flavor from CAP’s product must be appropriate with the target

market. If flavors are not interesting, the target market will not buy the product again.

● Design preferences: In CAP’s Consumer Survey38

, 40 percent of college students would

like to have better pen/pencil design. If the design is considered unfashionable or

uninteresting, CAP will not be able to attract young customers.

38

CAP, “Consumer Survey,” 2015.

20

Competition Analysis

Direct Competitors

There is currently no direct competitor that produces the similar product as CAP. The original

idea of creating the plastic with flavors was from the CEO of PolyFlav39

. The company is now

producing mouth guards with flavorful plastic parts. Otherwise, there is no current offering for a

pen with flavors on the market.

Indirect Competitors

There are two indirect competitors that produced products that have similar features to CAP.

ARK Company manufactures a pen for individuals with autism that is safe to chew40

. ChewStixx

creates chewable pen toppers and grips that can be placed on pen/pencils41

. However, both

companies’ products are expensive. For instance, ARK’s Tran-Quill set is priced at $39.99 and

individual pen will cost $29.99. ChewStixx offers their products, such as pencil toppers, at $6.99

on Amazon. Although ChewStixx is advertised also as pen toppers, they are only catered to

young children. Their design is therefore unsuitable to target college students. On the other hand,

both companies are poorly advertised on the internet. There are none of them to be found on

social media pages such as Facebook, Instagram, and Twitter. Searching Google only produces

few results.

Future Competitors

There will be competitors from both already established companies and new entrants. Since there

is a low barrier to entry, it is crucial for CAP Inc. to patent the product’s design and technology.

On the other hand, CAP must maintain a strong relationship with PolyFlav, the plastic supplier,

to prevent other competitors from purchase flavorful plastic. In the future, if CAP becomes a

large corporation, it is crucial to purchase the flavorful plastic technology to be independent from

the supplier since PolyFlav can possibly become CAP’s future competitor. Additionally, CAP

will have a first mover advantage when introducing the product to the market. If CAP becomes a

trend for young customers by creating a brand image that is associated with young, innovative,

and dynamic young generations, it will ensure customer loyalty. To make this happen, CAP will

spend significant on marketing and communication strategy. The average advertising budgets for

the Office and Supplies Manufacturing industry is only 2.6 percent of sales revenues. CAP plans

on spending around 15 percent of sale revenues of the first year dedicating to marketing. This

will help to ensure that the target market will be informed of our product. The following years

advertising budget will range from 5 to 8 percent.

39

"PolyFlav®: A Technology That Infuses FLAVOR into PLASTIC." Add The Flavor. 2009. Accessed January 22,

2015. 40

L, Tammy. "DnZ-VIBE Tran-Quill Pen Set and Cip-Kup." Autism Mom Blog. January 4, 2012. Accessed

February 14, 2015. 41 "Pencil Toppers." Chew Stixx Oral Motor Products. Accessed March 7, 2015.

21

Estimate of Annual Sales and Market Share In previous calculations, it is concluded that there are 517,242 individuals in the potential target

market. Each individual will need 2 pens for each academic semester. For annual sales

estimation, CAP expects to achieve approximately 7.2 percent of the target market for the first

year in 2016. CAP main seasonal sales would happen in June, July, August, December, and

January, when students are coming back to school after vacations. In the following years, CAP’s

goal is to grow at 3 percent annual. The objective for the second and third year will be 10.5

percent and 13.3 percent, respectively.

Sales Projection

Revenue will be generated from the sales of CAP’s products to campus stores and bookstores.

There are 81 colleges and universities in New York City42

. Therefore, it is estimated that there

are 81 distribution locations for CAP’s product. The wholesale price will be $2.99/unit.

First year sales estimation is projected at 149,000 units:

517,242 * 2 (pens) * 2 (semesters) * 0.072 = 148,966 (units)

Month Retail Price Unit Sold Sales Revenue

January $ 2.99 0 -

February $ 2.99 0 -

March $ 2.99 5,700 $ 17,043

April $ 2.99 7,100 $ 21,229

May $ 2.99 7,200 $ 21,528

June $ 2.99 23,500 $ 70,265

July $ 2.99 24,500 $ 73,255

August $ 2.99 24,500 $ 73,255

September $ 2.99 7,500 $ 22,425

October $ 2.99 7,500 $ 22,425

November $ 2.99 15,000 $ 44,850

December $ 2.99 26,500 $ 79,235

Total 149,000 $ 445,510

42

"New York Colleges." Campusexplorer. 2015. Accessed February 14, 2015.

22

January, June, July, August, November and December will be the major sales months for CAP’s

product because it is the time when students return to colleges and universities. CAP expects

campus stores will order a month before students return. In this calculation, other months will

experience a decrease in sales since students have vacations in-between and they do not buy

more supplies until the next semester. According to CAP’s Consumer Survey, approximately 64

percent students said that they purchase school supplies once per a semester43

. That is the reason

for such great differences between quarters.

The first two months will be the time when products are being manufactured. According to

firms, it takes up to 15 to 20 days to finish an order. Although CAP’s manufacturer is located in

New Jersey, it will take more time for the special flavorful plastic to be delivered to the

manufacturer. Therefore, it is expected that for the period of the first two months, there will be

no sales.

The manufacturer can produce up to 10,000 units per week44

.

Three years sales and market share estimations

Year Market Share Unit Sold Sales Revenue

2016 7.2% 149,000 $ 445,510

2017 10.5% 223,800 $ 669,162

2018 13.3% 292,000 $ 873,080

In 2016, CAP expects to sell 149,000 units with the total sales revenue of $445,510. This sales

revenue accounts for 7.2 percent of the total market share.

In 2017, the company expects to sell 223,800 units with the total sales revenue of $669,162,

which represents 10.5 percent of the total market share.

In 2018, CAP expects to sell 292,000 units with the total sales revenue of $873,080, which

represents 13.3 percent of the market share.

Detailed sales projection will be explained in the Financial Income Statement section45

.

* Notice:

Units sold and sales revenue will be round for easy preferences. Sales revenues in the table reflect the sales according to retain price at $2.99

43

CAP, “Consumer Survey,” 2015. 44

"Customized Promotional Ball Point Pens - Buy Customized Promotional Ball Point Pens Product on

Alibaba.com."http://www.alibaba.com/product-detail/customized-promotional-ball-point-pens_122463990.html. 45

CAP, “Financial Statement,” 2015.

23

Marketing Plan

Overall Marketing Strategy

The overall objective of CAP’s marketing strategy is to inform college students the benefits of

using CAP’s flavored pen as an alternative to relieve stress and negative emotions without

exposing them to toxic materials. Moreover, CAP expects to create a trend in which young

customers will consider CAP’s product as a unique product because it is flavorful and has an

excellent design. CAP desires to establish a strong brand image through inspiring young people

and interacting with their lifestyles. When thinking about young customers, CAP believes that

they are always moving forward and try their best to surpass any challenges. CAP’s tagline is

“When you’re stressin’ out, just chew it out,” which fits the belief. The product can represent a

tool to relieve stress and negative emotions. Without feeling nervous, these young people can

find the way to resolve their current struggles and problems. Excellent design is another point of

selling that will be tailored according to customers’ wants in the future.

CAP’s marketing campaign is based on the integrated marketing communications, which is the

combination of marketing approaches to ensure that the company's brand message is consistent

and reinforced. Promotional methods that CAP will implement include advertising, sales

promotions, public relations, direct marketing, personal selling, and social media. These methods

will be used to introduce and promote CAP as a high quality product with excellent design and

unique features. Meanwhile, the product’s price is significantly cheaper than alternative

specialized pens for people with chewing habits. This creates a price advantage when competing

against competitors.

For advertising, in-store printed advertisements will be a major promotional approach because

CAP’s product will be distributed directly to campus stores of each individual college and

university. This is important for CAP because our product is an impulse purchase and point of

sale displays could greatly increase our sales. These printed advertisements will be designed by

the design specialists that CAP outsources to.

Sales promotions will include coupons and product samples. Moreover, CAP would like to

create a product design contest for future designs because it will make the customers feel

involved, as well as gain exposure for the company. The contest will also reduce the product

design cost.

The online marketing efforts will be the combination of direct marketing, public relations,

personal selling, and social media. CAP will create an official website so that the company will

be able to have its own sales channels in the future. On the other hand, to create a trend among

young customers, CAP will utilize social media and the internet to reach out to a larger

population. Facebook, Twitter, and Pinterest will be major social networking sites of the

promotional campaign. Along with these sites, CAP intends to produce short video clips on

YouTube, as well as sponsoring vloggers for product review videos. In return, CAP hopes that

the marketing and communication efforts will ensure that the product will create a trend for

young customers.

24

Positioning

CAP asserts itself as a more exciting and safer product in comparison to the alternatives. While

using CAP’s product, the customers can relieve their negative emotions without exposure to

toxic materials or continuing bad habits, such as nail biting. Moreover, with excellent design and

a variety of flavors, customers can feel that they are unique and different.

Points of Differentiation

● CAP will feature the only pen with flavor infused plastic. There are not any direct

competitors that produce similar products.

● The product will come in a variety of flavors. To start, CAP will produce a “fruity”

product line. New flavors will be added as CAP incurs demand.

● There are variety of color choices for the product. The colors will directly correlate with

the flavor that the plastic is infused with.

● Excellent and unique design can influence the lifestyle and fashionable tastes of

customers.

● Strong emphasis on the use of toxin-free materials in order to create a product that is safe.

The plastic has been approved by FDA that it is safe to use.

● Reasonable price and strong brand image will establish a strong consumer loyalty.

Therefore, customers will return to purchase CAP’s product in the future.

Product Attribute Map

CAP’s positioning strategy and its primary point of differentiation are illustrated in the product

attribute map shown below. As shown, CAP’s product will be the product in its trade area that

ranks high on both (1) the mark in which it is tailored specifically to the needs of students to be

safe when they chew the product and (2) the extent to which it offers a high range of

convenience by adding an unique feature of flavored plastic and excellent design. Two indirect

competitors are ARK and ChewStixx. However, both of these products are expensive and poorly

advertised. ARK only offers specialized pens that can be used for students with autism. Their

design is not appealing to teenagers. Although ChewStixx produces more results online, it is

catered only to young children without excellent design. Both of these products therefore do not

have strong influence on the market.

25

Pricing Strategy CAP will price the produce based on cost-based pricing. This means CAP will calculate the cost

backward from the retail price. The pricing strategy is as follows:

● Cost of goods sold: CAP found a pen manufacture in New Jersey that produces pen at

$0.2 per a pen46

. However, since CAP is made with flavorful plastic, it will cost more to

produce. CAP believes that the cost to produce each individual pen will be $0.6/unit.

● Wholesale Price: Cost of goods sold is 40 percent of Wholesale Price. Therefore,

wholesale price will be $1.5/unit.

● Retail Price: Retail price is double of wholesale price. Therefore, retail price for a CAP’s

product is $2.99.

*Note: According to the Consumer Survey, approximately 87 percent of students will pay from

$1.00 to $2.99 to purchase a quality pen.

The price of CAP’s product is significantly cheaper in comparison with two indirect competitors.

ARK offers their product, which is the pen for autism children with special design and vibrate

compartment, at $29.99. ChewStixx offers their topper at $6.99 on Amazon. CAP first and second points of differentiation, being an only producer for this type of produce in

the market, and promoting CAP as a safe, unique, and stylish products becomes significant

advantages for CAP to compete for larger market share and higher profit than the other

companies. An objective is to create a trend of using CAP’s product.

46


Alibaba.com."http://www.alibaba.com/product-detail/customized-promotional-ball-point-pens_122463990.html.

26

Promotional Activities

CAP will implement its marketing strategy that is based on integrated marketing communication

(IMC) as follows:

● Social Media (Awareness and Interest): CAP will establish its own social media sites on

Facebook, Twitter, and Pinterest. Moreover, CAP will have its own YouTube channel

with advertising video about how students can be benefit from using the product. Free

sample can also be given out to famous vloggers, who have large number of followers.

These communication channels will ensure that customers will be informed.

● Advertising (Awareness and Interest): Print ads will be distributed to campus stores of

colleges and universities in New York City to make students aware of the products. CAP

will also distribute flyers to the public. Later, ads can be published on college and

university newspapers/magazines.

● Sales Promotion (Interest and Desire): There are several promotional methods that CAP

will implement. At the beginning stage, CAP will give out coupon that reduces the price

of the product by $1.00 per a pen. CAP intended to budget this category $3,000 annually.

Moreover, free samples will be given to campus stores so students can go there to try the

product. CAP would give out around 1,000 products to all campus stores in New York

City. On the other hand, the design contest will attract many young customers to

participate. The reward will be $3,000 as the prize. This contest will help the company

find many innovative designs for the product. It will also make the customers feel that

they are being listened.

● Direct Marketing (Action): after the customers are interested in the product, CAP will

promote the product online and customers can directly purchase it directly from the

company. This will reduce the price that customers will have to pay for retailers. With

more customers purchase directly through online website, higher demand is expected.

However, CAP believes that this will happen later in the future.

● Personal Selling (Action): CAP will have point of sales displayed in campus stores of

largest universities and colleges in New York City. The company wants to open a

communication channel to talk and receive feedbacks directly from the target customers.

● Public relation: Since plastic pens are considered as environmental hazardous waste,

CAP will donate to environmental events and have distribute newsletters to

colleges/universities informing about these activities. If CAP becomes a trend among

young customers, CAP will contact with famous individuals in New York City to ask

them for an interview or conference.

27

Annual Marketing Budget

CAP will use around 10 percent of the first year’s sales revenue for marketing expenses. On

average, the total marketing expenses annually will be around $34,000. Following table explains

details on how the budget will be distributed:

Item Budget

Website Development47

$1,500

Cost to design print ads (6 concepts for poster and flyers)48

$1,500

Printing cost (posters, flyers, and press release)49

$3,000

Cost to promote through vloggers $5,000

Filming and editing promotional YouTube video50

$3,000

Free samples (3000 units * $0.6) $1,800

Coupons value $3,000

Design contest $3,000

Environmental donation $3,000

Facebook, Twitter, and Pinterest advertising cost $5,725

Points of sales $3,000

Total $33,525

47

"How Much Does It Cost To Build A Website In 2014?" Executionists Blog. December 04, 2014. Accessed

March 20, 2015. 48

"The Digital Arts Group: Innovative Graphics and Web Design." Print Ad Design Pricing. 2015. Accessed March

20, 2015. 49

"Bulk Posters Printing." Affordable Bulk Poster Printing. 2015. Accessed March 20, 2015.

http://www.printrunner.com/bulk-poster-printing.html. 50

"How Much a Typical Promo Video Costs?" Grumo Media. January 20, 2015. Accessed March 20, 2015.

28

Management Team and Company Structure

Management Team

Colton Dershem, Cofounder and Chief Executive Officer (CEO)

Colton is accountable for overall success and growth of the company. He is also responsible for

human resources, operations, and administrative tasks. Operations include logistics, buying

supplies, supervising production, and inventory management. Administrative tasks include

customer relations through emailing and phone calls, office cleaning, and overall organization of

the office. Furthermore, he will also be able to assist with financial aspects such as sales

projections, budgeting, and cost analysis. Colton graduated from Lycoming with an

Undergraduate degree in Business Administration with tracks in Management and Finance and a

minor in Economics.

Anh Phan, Cofounder and Chief Financial Officer

Anh is responsible for marketing and financial aspects of the company. Marketing includes

advertising, finding appropriate sales channels, public relations, social media upkeep, and overall

sales of the company. The financial aspects include sales projections, investor relations,

budgeting, and cost analysis. Anh received his Undergraduate degree from Lycoming College,

majoring in Business Administration with tracks in Finance and Marketing. He also has double

major in Corporate Communication.

Skills Profile and Gaps in Management Team

The following skill profile depicts the most important skills required at the top management team

level of the company and where the gaps occur.

Executive

Leadership

Finance Operations Marketing Accounting Administration

Colton

Dershem X X X X

Anh

Phan X X X X

Gap 1 O

Gap 2 O

X = Position Filled, O = Position Vacant

29

CAP has two major gaps in the management team: Accounting and Marketing. CAP will be

looking to hire a full-time Marketer that will also serve as the CMO starting the third year. CAP

is using services such as the Lycoming College Alumni Network, Monster, Indeed, and other

forms of job search engine programs to find the optimal candidate for the marketing position.

CAP plans on outsourcing the accounting duties to a local firm. The tasks that will need to be

done by this firm include bookkeeping and payroll. Before choosing a firm, CAP will research

several firms and figure out fees, specialties, certifications, and availability. Beyond these

specifications, CAP would prefer a firm that will offer auditing support and a personal

connection.

CAP requires the Marketer to have a four- year degree in Marketing from an accredited

University. CAP will also require the applicants to have work related experience in the field and

three professional references. Since CAP is looking to make this candidate the CMO, CAP

would prefer that the candidate be personable and have similar key values to the current

management team.

Until CAP hires a CMO, CAP plans on outsourcing the marketing aspect to a local marketing

firm or a well-known firm that can be found on the internet.

Ownership and Compensation

The table below shows the current ownership status and compensation level for each position.

Name Position/Affiliation Base

Compensation

Percent

Ownership

Personal

Investment

Colton Dershem Cofounder and CEO $33,000 40% $100,000

Anh Phan Cofounder and CFO $33,000 40% $100,000

N/A Angel Investor N/A 20% $50,000

Colton Dershem, as the CEO, is responsible for the company’s overall results and performance.

With that being said, he has to oversee every department to make sure each one is functioning

correctly. On the other hand, the CFO Anh Phan and our future CMO are only in charge of their

designated departments and have fewer responsibilities. However, there are not that many extra

responsibilities and the upper level management team will be continuously helping each other as

needed. This is the reasoning behind the $2,000 pay difference between the CEO and the other

members of the upper management team.

The salaries of the upper level management team are relatively low compared to the market

averages. However, the company is a startup and the upper level management team has the

potential to achieve capital gains from their ownership of the company. The cofounders have

agreed that salaries must be lower than the average in order to cut costs at the beginning. Moreo

30

Other Professionals

Attorney, Imke Ratschko, Business Attorney at the Law office of Imke Ratschko

Mrs. Ratschko specializes in small business, emerging companies, startups, and business

disputes. Mrs. Ratschko and her law firm will provide CAP with legal advice, legal documents,

negotiation, and overall compliance of laws.

Certified Public Accountant, Sadh & Associates LLC

CAP plans on outsourcing their accounting responsibilities to Sadh & Associates LLC. Sadh &

Associates LLC offers small business accounting, auditing, and tax services. Instead of going to

multiple companies, CAP chose to stick with one company for all of the accounting needs.

Liability Insurance, Hiscox

Hiscox is a company that provides liability insurance that is catered to small businesses51

. CAP is

able to tailor the insurance coverage to the risks in our specific field by having Hiscox insurance.

Also, Hiscox offers worldwide coverage. This means that CAP will be able to keep the same

insurance as the company grows and expands.

Bank, Chase

Chase has the largest bank in the United States. Chase provides personal, business, and

commercial banking. Chase also offers the possibility of gaining a loan and a line of credit for

small businesses. Chase provided $19 billion in financing to small business in the United States

in 2013. Chase also provides donations to small business development organizations in order to

help different businesses in various locations.52

Also, Chase offers ease of access to CAP’s

banking needs by providing online banking where the company will have constant access to the

accounts.

51

"Hiscox Study Reveals Signs of Growth and Innovation." GlobeNewswire, September 09, 2014. 52

Lodge, Bill. "How a Small Business Lender Saved Baton Rouge Boutique Bakery Sugarbelle." The Advocate

(blog).

31

Organizational Chart

The CFO and CMO report to the CEO

The accounting firm will report to the CFO Anh Phan

The designer will directly report to the CMO. The designer will report to the CEO until the CMO

vacancy is filled.

32

Job Descriptions

Colton Dershem - Chief Executive Officer

Skills and Qualifications:

This position requires a four year degree from an accredited University. Specifically, a

Bachelor’s Degree in Business Administration or related field is preferable. This position also

requires developed interpersonal and communication skills. The ability to think critically is also

an important skill to have.

Job Responsibilities include:

● Responsible for overall actions and performance of the company, as well as

communicating these results to the upper level management.

● Construct, implement, and reinforce policies that comply within the cofounder

guidelines.

● Provides oversight of CAP’s activities, day to day operations, and overall functionality.

● Recruit, interview, evaluate, and hire candidates to fill vacancies within the company.

● Maintain relationships and contact with suppliers and distributors.

● Maintain full availability for anything that may occur in the business.

● Supervise production in order to assure quality, production rate, and efficient distribution.

Anh Phan - Chief Financial Officer



Bachelor’s Degree in Finance, Accounting, or related fields is preferable. The position also

requires developed problem solving and foreshadowing skills. Knowing financial concepts and

ratios are also important knowledge to have.


● Direct and oversee all of the finance and accounting aspects of the company.

● Monitor financial performance and develop financial strategies by analyzing financial

documents.

● Receive financial data from the accounting firm and interpret the results to the CEO.

● Create accurate sales projections and then create budgets based on the outcome.

● Maintain a relationship with the company’s bank in order to potentially gain future loans

and lines of credit.

● Work with the company’s accounting firm to perform audits as needed.

33

Vacant - Chief Marketing Officer (Plan on hiring for the third year)



Bachelor’s Degree in Marketing, Communications, or related fields is preferable. The position

also requires developed sales techniques and communication skills. Knowing different marketing

channels and how optimize these channels is very important skill to have.


● In charge evaluating advertising channels and utilizing the most beneficial methods.

● Responsible for creating and implementing advertisements for said channels.

● Responsible for creating and maintaining public relations.

● Constantly updating and improving the company's digital media assets.

● Locate retail locations for the product to be sold to.

● Create and maintain sales contracts, as well as building a relationship.

● Establish sales goals and quotas.

Vacant - Designer

● Create original and innovative product designs.

● Submit final designs to the CEO for approval and feedback.

● Work with the company’s business attorney, Imke Ratschko, to file legal documents

pertaining to the designs.

Company Culture

The company culture of CAP will be a mixture of a guided missile and incubator approaches.

First of all, CAP wants to focus on customer service but also be goal oriented. At the same time,

CAP wants to cater to its employees and make it a desired company to work for. This will help

reduce employee turnover and ultimately reduce costs in the long run. CAP would prefer that the

team works together to problem solve in order to be as efficient as possible. Finally, as the

number of employees increase, structure will also increase as needed.

34

Operations Plan

Operations Model and Procedures

Introduction

CAP will outsource production of flavored plastic pencils and then sell the product to local

campus stores. The operating model and procedures for the center are explained in the following

sections.

General Approach to Operations

The office of CAP will act as the headquarters for the majority of the operations pertaining to the

product. The office will be smaller than average, but will allow CAP to perform all operations

that are necessary. By choosing a smaller office, CAP will be able to save money and spend it

elsewhere as needed.

Back Stage Activities

● Staff Selection. The employees will be carefully selected as positions are available. There

will be specific processes and qualifications that the candidates must have.

● Product Design. The design of our product will be bought from a design agency for a flat

fee.

● Company Strategy. The overall strategy will be decided by the CEO and approved by the

upper level management.

● Order Fulfillment. Orders will be received by the CEO (Until the CMO position is filled)

and then communicated to the manufacturer in order to be fulfilled.

● Administrative Tasks. Administrative tasks include organization, answering phone calls

and emails, and scheduling meetings.

● Financial Activities. Financial activities include book keeping, paying bills, budgeting,

and financial projections.

● Marketing. Marketing includes creating promotional materials, creating a marketing

strategy, public relations, and checking on point of sale promotions.

Front Stage Activities

● Customer Service. All staff members will be expected to contribute to answering

customer concerns and questions through phone conversations and emails.

● Point of Sale. CAP has chosen to start sales at campus stores and expand when

opportunities are available.

● Packaging. Packaging will be designed by a design company and approved by upper

level management.

● Hours of Operation. CAP will operate from 9:00AM to 5:00PM, Monday through

Saturday. Upper level management will be on call at all times to ensure the best customer

service for the consumers.

● Digital Media. The company website and other social platforms will be updated regularly

based on a schedule.

35

Business Location CAP is proposing to conduct business in New York City. However, CAP plans on renting an

office in Newark, New Jersey. CAP plans on renting an office at the Military Park Building,

which is located at 60 Park Place in Newark, NJ53

. The space will be 160 square feet and costs

$3520 per year, or $293.33 per month. This location is considered to be ideal for CAP for the

following reasons:

Advantages of Location

● Amenities. The office complex offers “24/7 access with an attended lobby and

complimentary on-site tenant parking.”54

● Ideal Community. The building is in the center of the Newark Business District. The

building is also two blocks from the two major transit centers, the Gateway Center and

Penn Station. These transit centers will allow CAP to easily commute to New York City.

● Proximity to Supplier. This location provides us with a short commute to our supplier,

PolyFlav. This will allow CAP to maintain contact and a relationship with the supplier.

● Proximity to Target Market. The location is roughly a 40 minute drive to where we will

be selling our products.

● Proximity to Manufacturer. The office location is relatively close to our manufacturer.

This will allow our shipping costs to stay low. This will also allow us to maintain a

relationship and oversee the manufacturing process if necessary.

● Staffing. This location is extremely close to numerous college campuses, which will

allow us to recruit for our company as it grows.

● Ability to Expand. This location gives us the ability to easily expand into new markets.

Facilities and Equipment

CAP has identified a 160 square foot office in Newark, New Jersey that the company will

conduct business from. The building offers spaces in a variety of sizes. This will allow CAP to

rent other offices in the same building as the company grows.

CAP will be required to purchase its own equipment. The equipment needed to be purchased

includes two desktop computers, one multifunctional printer, filing cabinets, two office chairs,

two desks, computer paper, ink cartridges, one conference phone, an office safe, one paper

shredder, and various office supplies. Also, CAP will have to purchase another desktop computer

and desk in the third year for the marketing professional that will be hired.

Manufacturing CAP will outsource the manufacturing of the product to a company in New Jersey called “The

Promo Bands”55

. This company was found on Alibaba.com, a reliable website that allows buyers

to find suppliers. This company is able to create 10,000 units per week.

53

"Military Park Building." RSS. Accessed March 20, 2015. http://www.newarkofficespace.com/listings/military-

park-building/. 54

"About | Building." About « Military Park Building. 2015. http://www.mpb60.com/about.

36

CAP has looked into other manufactures in the United States, but no other manufacturers have a

product similar to what we want or a location that is close to CAP’s office.

Since CAP is outsourcing the production to a company in the United States, the company will be

able to have a quick turnover of product, comply with FDA standards, and oversee production if

necessary. However, having a manufacturer in the United States will also cost more to create.

Distribution

CAP will distribute the product to 110 campus stores in the area of New York City. CAP chose

campus stores because of their proximity and use by the target market. Having our product being

distributed through campus stores will allow it to be subjected to the target audience the most.

As CAP becomes more popular, CAP plans on expanding its business to other target markets and

also search for more distributors to carry the product in order to satisfy the customer’s needs.

Timeline

If funding is obtained, CAP will open at 60 park place in Newark, NJ on June 1st, 2015. The

following milestones have been completed and remain too completed to start operations.

Completed Milestones

May 2015 Completed feasibility analysis

Two-Member management team in place

$200,000 invested by management team

Consumer survey and concept statement completed

Milestones to Be Completed

August 2015 $50,000 invested by angel investor

File and pay for patent

Develop website and social media platforms

January 2016 Order prototype and test the product

Get FDA approval

Sign lease for the office

Purchase office supplies needed

Sign contracts with distributors

Challenges and Risks The following challenges and risks have been considered by upper level management when

bringing MAC into operations.

● Angel Investor: Currently, CAP does not have enough capital to start operations. The

Angel Investor(s) is expected to contribute $50,000 for 20 percent ownership of the

company. CAP has contacted several investors and is in the process creating and signing

55


Alibaba.com."http://www.alibaba.com/product-detail/customized-promotional-ball-point-pens_122463990.html.

37

a contract with one. If an investor is not found, CAP will have to delay operations until

one is found.

● Exceeding Budgeted Costs: The initial costs have been carefully assessed, as shown in the

financial section. Exceeding the original budget would be troublesome for the company

financially.

● Safety Concerns: Our product may raise concerns to skeptical individuals based on the

safety of our product. Safety concerns could impede sale. To be proactive, CAP will post

the approvals on the packaging to prevent skepticism.

Intellectual Property

Patents: CAP will be filing a patent for the product. CAP will be using their business attorney,

Imke Ratschko, to file the patent. The overall cost for the patent and attorney costs will be

$7,50056

.

56

Quinn, Gene. "The Cost of Obtaining a Patent in the US." IPWatchdog. January 28, 2011. Accessed February 14,

2015.

38

Financial Projections

CAP predicts that the business will be self-sufficient starting the second year. The table below

shows the Sources and Uses of Funds proposed for the first year in order for MAC to break even.

Statement of Sources and Uses of Funds

Source of Funds Amount of Cash Percentage of Ownership

Colton Dershem, CEO 100,000 40%

Anh Phan, CFO 100,000 40%

Total Funds Committed 200,000

Total Funds Required 250,000

Total Funds Needed From Angel Investor 50,000 20%

Uses of Funds

Officer Compensation 80,000

Payroll Taxes 19,520

Employee Benefits 4,960

Marketing Firms Outsourcing 24,000

Office Rent 3,520

Utilities 3,120

Office Supplies 2,000

Office Equipment 3,000

Office Furniture 2,000

Travel Expenses 1,200

Marketing & Advertising 33,525

Accounting 5,000

Auditing 5,000

Patent 7,500

Attorney Fees 5,000

Other Expenses 1,500

Insurance 2,200

Cash (For working capital and future loss) 46,955

Total Required Fund 250,000

39

Assumptions Sheet

CAP financial report is dependent on important assumptions. The key underlying assumptions

are as follows:

General Assumptions:

1. The U.S. Office Supplies Manufacturing Industry is expected to sustain a steady growth

rate at 3 percent annually in 2016, 2017, and 2018.

2. CAP will create a trend among the population of college students in New York City.

There is an interest in flavored pen among young people.

3. CAP Inc. assumes that the equity capital in the amount of $250,000 consistent with the

Sources and Uses of Funds statement in this business plan is accessible.

4. No major fluctuations and changes in the current market places regarding about material

prices, production costs, and governmental policies and regulations.

Financial Statements Assumptions

Income Statements

1. Sales forecasts are based on the analysis presented in the “market analysis” section of this

business plan:

a. There is no sales revenue for the first two months because CAP expects it should

take 60 days for an entire manufacturing process, including shipment of flavored

plastic from PolyFlav to The Promo Bands in New Jersey and distribution of the

product to campus stores in New York City.

b. Sales are projected to increase by 3 percent each year to match with the 3 percent

annual growth of the U.S. Office Supplies Manufacturing Industry.

c. There are two major sales seasons. The first one is June, July, and August. The

second one is November, December, and January. These months represent the

period shortly prior to academic semester starts. These six months will account

for more than 80 percent of annual sales. The least sales months are those in

between, when only a small amount of students will purchase more for their

supply. It will account for the rest 20 percent of the annual sales.

d. On average, CAP desires to obtain at least 10 percent of the market share, which

represents approximately 206,900 in unit sales and $618,631 in sales.

e. For the first year, however, the growth rate expectation is only 7.2 percent. Since

CAP is introduced in March, the company missed the first major months to

prepare for academic semester due to the 60 days period of manufacturing.

Therefore, the product will not be immediately famous. On the other hand, this

period will help CAP to test the market before major sales season. With effective

marketing, CAP expects to have a significant increase in sales in June, July, and

40

August, to compensate for the previous months. Sales revenue therefore will be

approximately $446,000

f. The sales projection for the following years will be based on the industry annual

growth rate at 3 percent. Sales in 2017 and 2018 will be approximately $670,000

and $807,000, respectively.

2. Whole sales price will be at $1.5/ unit. Since CAP distributed directly to campus stores in

New York City, CAP receive cash on hand. This sales price will therefore be used in

accounting format to calculate revenues.

3. Cost of Goods Sold (COGS): 40 percent of net sales.

4. Discounts and promotions are already included in the Marketing budget. Refer to the

Annual Marketing Budget in the “Marketing Plan” section for further information.

5. CAP assumes that there are no returned goods because of the product nature.

6. Officer’s compensation based on “Ownership and Compensation” table shown in the

“Management Team” section of this business plan.

a. For the first year, however, to keep the cost down, CEO and CFO agree to lower

the compensation to the average disposable income after tax in Newark, New

Jersey, at $35,000. For the second year and the third year, both will raise their

salary to $40,000 as the company will earn more revenue.

b. At the beginning, there are three vacant positions, which are CMO, designer, and

accountant.

i. For the CMO position, CAP intends to outsource to the marketing firm for

the first two years. The cost for the outsourcing will be $24,000 a year. In

the third year, as the company has already obtained a fair market share,

CAP can afford to find a CMO, who is willing to contribute, with the

salary at $40,000 annually. Also, after the third year, CAP intends to keep

purchasing some advertising packages from the marketing firm that

worked for the company.57

ii. The designer position is not necessary as CAP will organize a design

contest with the reward of $3,000 for the winner. Professionals will edit

these designs to ensure the overall quality.

iii. CAP will outsource accounting to an accounting firm in Newark. There is

no information about cost for an accounting firm in Newark to provide

bookkeeping, payroll, and taxes service. However, a website provides a

service for $65/ month. As a small business, CAP assumes that it will cost

$100/month, which adds up to $1,200 a year for accounting.58

c. Payroll tax is 6.2 percent of total wages, salaries, and compensation.

d. Benefits are figured at 24.4 percent of wages, salaries, and compensation.

57

Heiler, Chris. "How Much Will It Cost to Hire a Marketing Agency?" Landscape Leadership (blog), July 11,

2013. 58

"America's Premier Remote Bookkeepers." How RemoteBooksOnline Works. Accessed April 10, 2015.

http://www.remotebooksonline.com/rbo/how-it-works.html.

41

e. Attorney fees will be budgeted at $5,000/ year. CAP executives will meet up with

the attorney twice.59

f. Patent fee includes filling application and attorney fee, which is estimated at

$7,500. The fee will be paid in the first year only.60

g. Office rent expense for a 160 square-foot office is $22/ SF/ year. The monthly

expense will be $300. Annually expense is $3,600. The office will be located in

Newark, New Jersey.61

h. Utilities expense includes electricity, telephone, gas, water, and internet. On

average, monthly utilities expenses will be $260 in Newark.62

i. Annual insurance policy will be $2,500. The policy will cover building,

properties, and business liabilities, especially product liability. CAP assumes that

insurance policy expected to increase by 25 percent a year as CAP expands.63

j. Marketing expenses based on annual marketing budget in “Marketing Plan”

section of this business plan:

i. In the first year, marketing expenses will account for more than 15 percent

of net sales because the product is newly introduced to the market and

needs advancing promotional campaign.

ii. For the next two years, CAP can reduce marketing expanse to 8 and then 5

percent since the company no longer need to sponsor for vloggers.64

iii. Marketing expenses will be higher during the peak months (June, July,

August, November, December, and January). Other month the expense

will be significant reduced.

iv. Discounting and free sample cost will be based on the cost of goods sold.

k. Office supplies are going to be purchase at the beginning of the year. For the first

year, office supplies will include furniture and equipment, such as laptops and

printer. For the next two years, the company estimates that it will cost around

$2,000/year. Moreover, these expenses will increase by 50 percent the following

years as the company grows.

l. CAP proposes to have $1,200 as a travel budget because it is necessary to move

back and forth into New York City for business and promotional activities.

m. Auditing cost will range between $5,000 and $20,000 a year. As a small business,

CAP expects to pay $5,000 for auditing a year.

59

Shulga, Arina. “How Much Should a Startup Pay in Legal Fees?” LexisNexis Legal Newsroom. 2014. Accessed

April 5, 2015. 60

Quinn, Gene. "The Cost of Obtaining a Patent in the US." IPWatchdog. January 28, 2011. Accessed February 14,

2015. 61

"Military Park Building." RSS. Accessed March 20, 2015. http://www.newarkofficespace.com/listings/military-

park-building/. 62

"Cost of Living in Newark, NJ, United States.” Numbeo. 2014. Accessed April 3, 2015. 63

"Business Insurance Cost." Trusted Choice. 2015. Accessed April 3, 2015.

https://www.trustedchoice.com/business-insurance/compare-coverage/cost/. 64

Heiler, Chris. "How Much Will It Cost to Hire a Marketing Agency?" Landscape Leadership (blog), July 11,

2013.

42

n. U.S. inflation rate is assumed at 1 percent currently. All expenses are subject to

this inflation rate.

Balance Sheet

7. There are no liabilities associated with CAP because CAP will seek for capital from angel

investors. Campus stores and retailers will make payments directly to CAP. The company

accepts no credit.

8. Currently, the website will be for marketing purpose only. Therefore, no online sales will

be made, and CAP will hold no inventory. Orders will be delivered directly from

manufacturers to retailers and campus stores.

9. It assumed that there are no fixed assets currently because CAP will have no valuable

fixed asset besides furniture and office equipment.

43

Income Statement 2016 (First Year of Business)

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total

Units Sold - - 5,700 7,100 7,200 23,500 24,500 24,500 7,500 7,500 15,000 26,500 149,000

Gross Sales - - 8,550 10,650 10,800 35,250 36,750 36,750 11,250 11,250 22,500 39,750 223,500

(Cost of Goods Sold) - - 3,420 4,260 4,320 14,100 14,700 14,700 4,500 4,500 9,000 15,900 89,400

Gross Profit - - 5,130 6,390 6,480 21,150 22,050 22,050 6,750 6,750 13,500 23,850 134,100

Expenses

Officer Compensation 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 66,000

Payroll Taxes 341 341 341 341 341 341 341 341 341 341 341 341 4,092

Employee Benefits 1,342 1,342 1,342 1,342 1,342 1,342 1,342 1,342 1,342 1,342 1,342 1,342 16,104

Marketing Firm Outsourcing 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000

Office Rent 293 293 293 293 293 293 293 293 293 293 293 293 3,520

Utilities Expenses 260 260 260 260 260 260 260 260 260 260 260 260 3,120

Office Supplies Expenses 4,000 182 182 182 182 182 182 182 182 182 182 182 6,000

Travel Expenses 100 100 100 100 100 100 100 100 100 100 100 100 1,200

Marketing & Advertising 1,676 335 335 335 335 10,058 5,029 3,353 671 671 5,699 5,029 33,525

Accounting 100 100 100 100 100 100 100 100 100 100 100 100 1,200

Audit Service 5,000 5,000

Attorney Fees 2,500 2,500 5,000

Patent 7,500 7,500

Other Expenses 125 125 125 125 125 125 125 125 125 125 125 125 1,500

Insurance 183 183 183 183 183 183 183 183 183 183 183 183 2,200

Total Expenses 25,921 10,762 10,762 10,762 10,762 22,984 15,455 13,779 11,097 11,097 16,126 20,455 179,961

Net Income (25,921) (10,762) (5,632) (4,372) (4,282) (1,834) 6,595 8,271 (4,347) (4,347) (2,626) 3,395 (45,861)

44

Income Statement 2017 (Second Year of Business)


Units Sold 31,332 4,476 4,476 4,476 4,476 29,094 44,760 29,094 11,190 11,190 23,380 26,856 223,800

Gross Sales 46,998 6,714 6,714 6,714 6,714 43,641 67,140 43,641 16,785 16,785 33,570 40,284 335,700

(Cost of Goods Sold) 18,799 2,686 2,686 2,686 2,686 17,456 26,856 17,456 6,714 6,714 13,428 16,114 134,280

-

Gross Profit 28,199 4,028 4,028 4,028 4,028 26,185 40,284 26,185 10,071 10,071 20,142 24,170 201,420

Expenses


Payroll Taxes 413 413 413 413 413 413 413 413 413 413 413 413 4,960


Marketing Firm Outsourcing 2,020 2,020 2,020 2,020 2,020 2,020 2,020 2,020 2,020 2,020 2,020 2,020 24,240

Office Rent 296 296 296 296 296 296 296 296 296 296 296 296 3,555


Office Supplies Expenses 168 168 168 168 168 168 168 168 168 168 168 168 2,020

Travel Expenses 101 101 101 101 101 101 101 101 101 101 101 101 1,212


Accounting 101 101 101 101 101 101 101 101 101 101 101 101 1,212

Audit Service

5,050 5,050

Attorney Fees 2,525

2,525

5,050

Other Administrative Expenses 126 126 126 126 126 126 126 126 126 126 126 126 1,515

Insurance 183 183 183 183 183 183 183 183 183 183 183 183 2,778

Total Expenses 19,624 12,692 12,692 12,353 12,353 21,320 17,099 15,404 12,692 12,692 17,099 22,149 188,169

Net Income 8,574 (8,663) (8,663) (8,324) (8,324) 4,865 23,185 10,780 (2,621) (2,621) 3,043 2,021 13,251

45

Income Statement 2018 (Third Year of Business)


Units Sold 40,880 5,840 5,840 5,840 5,840 37,960 58,400 37,960 14,600 14,600 29,200 35,040 292,000

Gross Sales 61,320 8,760 8,760 8,760 8,760 56,940 87,600 56,940 21,900 21,900 43,800 52,560 438,000

(Cost of Goods Sold) 24,528 3,504 3,504 3,504 3,504 22,776 35,040 22,776 8,760 8,760 17,520 21,024 175,200

Gross Profit 36,792 5,256 5,256 5,256 5,256 34,164 52,560 34,164 13,140 13,140 26,280 31,536 262,800

Expenses


Payroll Taxes 620 620 620 620 620 620 620 620 620 620 620 620 7,440


Marketing Firm Outsourcing 202 202 202 202 202 202 202 202 202 202 202 202 2,424

Office Rent 299 299 299 299 299 299 299 299 299 299 299 299 3,591


Office Supplies Expenses 255 255 255 255 255 255 255 255 255 255 255 255 3,060

Travel Expenses 102 102 102 102 102 102 102 102 102 102 102 102 1,224


Accounting 102 102 102 102 102 102 102 102 102 102 102 102 1,224

Audit service

5,101 5,101

Attorney Fees 2,550

2,550

5,101

Other Administrative Expenses 128 128 128 128 128 128 128 128 128 128 128 128 1,530

Insurance 292 292 292 292 292 292 292 292 292 292 292 292 3,507

Total Expenses 20,540 15,143 15,143 14,924 14,924 21,635 17,990 16,895 15,143 15,143 17,990 23,091 208,564

Net Income 16,252 (9,887) (9,887) (9,668) (9,668) 12,529 34,570 17,269 (2,003) (2,003) 8,290 8,445 54,236

45

Balance Sheets

January 1,

2016

Start of

Business

December 31,

2016

End of

First Year

December 31,

2017

End of

Second Year

December 31,

2018

End of

Third Year

Assets

Current Assets

Cash and Equivalents 250,000 204,139 217,390 271,627

Other Current Assets - - - -

Total Current Assets 250,000 204,139 217,390 271,627

Fixed Assets - - - -

Total Fixed Assets - - - -

Total Assets 250,000 204,139 217,390 271,627

Liabilities and Equity

Shareholders' Equity - - - -

Contributed Capital 250,000 250,000 204,139 217,390

Retained Earnings

(45,861) 13,251 54,236

Total Shareholders' Equity 250,000 204,139 217,390 271,627

-

Total Liabilities and

Shareholders' Equity 250,000 204,139 217,390 271,627

47

Statement of Cash Flows

December 31,

2016

December 31,

2017

December 31,

2018

Cash Balance at the Beginning of the

Year 250,000 204,139 217,390

Cash Flow from Operating Activities

Net Income (Loss) (45,861) 13,251 54,236

Total Adjustments 204,139 217,390 271,627

Cash Flow from Investing Activities

Subtractions

Purchase of Office Equipment 0 0 0

Purchase of Office Furniture 0 0 0

Purchase of Patent 0 0 0

0 0 0

Cash Flow from Financing Activities

Additions 0 0 0

Subtractions 0 0 0

Cash Balance at End of Year 204,139 217,390 271,627

Ratios

2016 2017 2018

Profit Margin -20.52 % 3.95 % 12.38 %

48

Appendices

First Screen

Part 1: Strength of the Business Idea

For each item, circle the most appropriate answer and make note of the (-1), (0), or (+1) score.

Low Potential (-1) Moderate Potential (0) High Potential (+1)

1. Extent to which the idea:

● Takes advantage of an

environmental trend

● Solves a problem

● Addresses and unfilled

gap in the

marketplace

Weak Moderate Strong

2. Timeliness of entry to market Not timely Moderately timely Very timely

3. Extent to which the idea

“adds value” for its buyer or

end user

Low Medium High

4. Extent to which the customer

is satisfied by competing

products that are already

available

Very satisfied Moderately satisfied Not very satisfied or

ambivalent

5. Degree to which the idea

requires customers to change

their basic practices or

behaviors

Substantial

changes

required

Moderate changes

required

Small to no changes

required

1. Pens have been around for over two decades, the first was the fountain pen and then the

ballpoint pen, which was created around 1938. However, since the ballpoint pen, pens

have only been updated as needed and we think that it is time for an innovation. Our

product is a flavored pen, which has not yet been created. We think that our product can

fill the gap in the market because 45% of teenagers are nail biters and our product can

provide a temporary solution for them that is much more hygienic.

Pesic, Peter. "The Man Who Changed the Way We Write." The Wall Street Journal (New York),

August 17, 2012.

Romanowski, Perry. "Ballpoint Pen & Its Inks." PaintIndia, July 2008, 160-63.

Leung, Alexander. "Nailbiting." Clin Pediatr 29, no. 12 (December 1990): 690-92.

2. Pen sales are currently expected to increase 4.9% into an $8.5 billion industry this year.

The rise is supposed to continue for at least five years, which leads us to believe this is a

moderately good time to enter the market.

49

Drozdiak, Natalia. "Pencil Makers Go Back to Drawing Board." Wall Street Journal (New

York), October 15, 2014.

3. Our product will add a great deal of value to our target market. The target market will be

students that chew on the bland tasting pens that they already have. Our product will be

flavorful and FDA approved, which will be attractive for mothers to buy for their

children. The pen will be a substitute for other pens that may have toxins within the

plastic. Also, research has shown that chewing gum is beneficial to alertness and

sustained attention. We believe that these benefits can be transferable into our product

because it is almost the same process.

Smith, Andrew. "Effects of Chewing Gum on Cognitive Function, Mood and Physiology in

Stressed and Non-stressed Volunteers." Nutritional Neuroscience 13, no. 1 (February 01,

2010): 7-16.

"PolyFlav®: A Technology That Infuses FLAVOR into PLASTIC." Add The Flavor. 2009.

Accessed January 22, 2015.

Esposito, Frank. "Entrepreneur Develops Taste for Plastics." Plastics News 21, no. 10 (May 11,

2009): 4.

4. In the current market, there is a huge selection of products within our category. However,

there is no producer for our particular idea. ARK Company provides a quite similar

product with a chewable pen tip for students with autism. However, the price of this

product is set quite high at $39.99. Also, the pen tips are not flavorful like our product

will be. Since there are a few companies providing a similar service, we believe that our

customers are only moderately satisfied with their current offerings.

Razzi, Elizabeth. "The Write Stuff." Kiplinger's Personal Finance, May 1, 2003, 105-08.

L, Tammy. "DnZ-VIBE Tran-Quill Pen Set and Cip-Kup." Autism Mom Blog. January 4, 2012.

Accessed February 14, 2015.

5. Our product will also require little to no change in customer behavior. The pen will have

a similar design to what is currently offered and will be used in the same fashion. Also,

any changes that we would make to the overall design would create additional ease for

the user.

Part 2: Industry-Related Issues

Low Potential (-1) Moderate Potential (0) High Potential (+1)

1. Number of

competitors

Many Few None

2. Stage of industry life

cycle

Maturity phase or

decline phase

Growth phase Emergence phase

3. Growth rate of

industry

Little or no growth Moderate growth Strong growth

4. Importance of “Ambivalent’ “Would like to have” “Must have”

50

industry’s products

and/or services to

customers

5. Industry operating

margins

Low Moderate High

1. The industry is a highly competitive field with a wide variety of the U.S. and

international brands. With low barriers to entry, it is therefore easier for new competitors

to enter the market. MarketLine Industry Profile reports that since the industry has a

steady growth, it causes the rivalry to increase as well. Furthermore, low brand loyalty

and easy access to suppliers and distributors are reasons for the likelihood of new

entrants. On the other hand, with the fifty largest firms hold 75% of the market sales, it

will be challenging to compete both against large corporations as well as many smaller

firms in the industry.

"Office, School & Art Supplies Manufacturing." Hoovers, 2015. Accessed January 31, 2015.

"Office Services & Supplies Industry Profile: United States." MarketLine, October 1, 2014, 1-31.


2. The pen industry is currently in its maturity phase since it has been around a long time

and technology is replacing the products. Even though the market is in its maturity, small

businesses in this industry are able compete through specialized products and superior

craftsmanship. This leads us to believe that if we can improve the design of the product to

fit the market trends and needs, we will be able to produce the sales that are needed.


Chemin, Anne. "Handwriting vs Typing: Is the Pen Still Mightier than the Keyboard?" The

Guardian, December 16, 2014. Accessed February 8, 2015.

3. MarketLine Industry Profile reported that the actual growth of the industry in 2013 was

nearly 5%. MarketLine also reported that the U.S. market uses 42.1% of global office

services and supplies market value. Pen and Pencil Manufacturing accounted for 24% of

total revenue. In the short term, CNBC forecasted that the U.S. economy is expected to

grow at 3% in 2015. In the long term, it is predicted that from 2014 to 2018, the industry

growth is expected to maintain at 2% annually. Therefore, our products will have a steady

growth for at least the next four years.




AP. "Why the US Will Power the World Economy in 2015." CNBC, December 30, 2014.


51

4. Pens and pencils are an important tool for writing that nearly everyone uses daily. As

stated above, although technology is replacing some office supplies, there is no clear

evidence that the pen is going to be replaced soon in the future. Our customers will find

the product attractive with flavors and excellent design.

Chemin, Anne. "Handwriting vs Typing: Is the Pen Still Mightier than the Keyboard?" The

Guardian, December 16, 2014. Accessed February 8, 2015.

5. The industry average operating margin is 5.7%, and net income is at 2.8%. If our product

improves performance, we will be able to charge premium price, which will increase

profit in comparison to other brands. While the nature of this product has a low operating

margin, with most pens costing under a dollar, we will be able to achieve an above

industry average return.


Crouch, Christopher. "Value Added Sales - Finding the True Value in Each Sale." Concrete

Products 114, no. 11 (November 2011): 6-7. Accessed February 10, 2015.

Part 3: Target Market and Customer-Related Issues

Low Potential (-1) Moderate Potential (0) High Potential (+)

1. Identification of

target market for the

proposed new venture

Difficult to identify May be able to identify Identified

2. Ability to create

“barriers to entry” for

potential competitors

Unable to create May or may not be

able to create

Can create

3. Purchasing power of

customers

Low Moderate High

4. Ease of making

customers aware of the

new product or service

Low Moderate High

5. Growth potential of

target market

Low Moderate High

1. Our market is strongly driven by educational enrollment. Major cities in the U.S., such as

New York City, are a prime area for our product because they have a large student

population. This leads us to believe that students in North East metropolitan areas will be

the optimal target for our product. We chose students because studies have shown that

handwritten notes prevail over current technological offerings. On the other hand, we are

also going to target parents of the students as well because 45% of teenagers are nail

biters, and parents are worried about their children’s’ health. We create this product

because it is a better alternative than the current offerings from other pen manufacturers.

52

Mueller, Pam, and Daniel Oppenheimer. "The Pen Is Mightier Than the Keyboard: Advantages

of Longhand Over Laptop Note Taking." Psychological Science, 6th ser., 25 (April

2014). Accessed February 13, 2015.

2. We are currently unsure if we are able to create barriers to entry for potential competitors

because of patent regulation and requirements. However, if we are able to patent a

flavored pen it would be a huge barrier to entrants with our specific market. We think that

this is a very plausible idea because the Obama Administration is working on easing the

patent process in America. They are doing this to help smaller businesses and the process

of starting a business.

Favole, Jared. "Obama Administration Takes Steps To Ease Patent Process." Wall Street

Journal, February 20, 2014. Accessed February 13, 2015.

3. Students have high purchasing power when it comes to school supplies and will be able

to buy our product. According to CNBC, family with children enrolled in grades

kindergarten through college will spend around $101.18 on school supplies each year.

Total spending on back-to-school items was expected to be $74.9 billion in July 2014, in

comparison with $72.5 billion in 2013. We also found out that 86% percent of students

plan on purchasing school supplies this year. Furthermore, 55% plan on spending more

this year than last year.

Gustafson, Krystina. "Expect to Spend More on Back-to-school This Year: NRF." CNBC, July

17, 2014. Accessed February 7, 2015.

Fleming, John. "During Back-to-School Season, U.S. Families Spending More." Gallup Poll

Briefing, September 4, 2014, 2.

4. We may be able to easily make customers aware of the flavored pen by starting a trend

in the market. We will do this through big box retailers and social media, which are both

great tools for advertising. Trending occurs regularly in our market, usually based on

specific designs of the pen or on the pen. Similarly, a group at Stanford noticed another

gap in the pen industry, a lack of precision writing instruments, and has had great success

in the industry after filling the gap with their product.

"Write On." Gifts & Decoration Accessories, May 2014, 100. Accessed February 9, 2015.

Blakely, Lindsay. "Making Their Point." Business 2.0, April 2007, 54. Accessed February 9,

2015.

5. Our potential target market growth is moderate because other market segments may not

see the appeal, such as business settings or adults. However, that does not mean that they

are not our potential customers. Businesses and home offices purchase a substantial

amount of office supplies annually, which means they could potentially purchase our

flavored pen. Also, there is a constant supply of students going back to school every year

53

so we do not think that our market could decline. New York City is our primary market

and there are currently around 594,000 college students, which is a large market for our

product.


"Small Business, Big Impact!" U.S. Small Business Administration. 2015. Accessed February 3,

2015.

Part 4: Founder - (or Founders-) Related Issues

Low Potential (-1) Moderate Potential (0) High Potential (-1)

1. Founder or founders

experience in the industry

No experience Moderate experience Experienced

2. Founder or founders skills

as they relate to the proposed

new venture’s product or

service

No skills Moderate skills Skilled

3. Extent of the founder or

founders professional and

social networks in the

relevant industry

None Moderate Extensive

4. Extent to which the

proposed new venture meets

the founder or founders goals

and aspirations

Weak Moderate Strong

5. Likelihood that a team can

be put together to launch and

grow the new venture

Unlikely Moderate likely Very likely

Please explain how you reached the above conclusions. Do not forget to include citations.

1. Our current team includes Anh Phan and Colton Dershem. We have no experience in the

industry that we are pursuing. We are both seniors at Lycoming College and have yet to

find professional experience that could pertain to our product.

2. We have general skills and knowledge, but nothing that is specialized. Since our product

is innovative, we would have to hire a pen designer to create our design. Also, we would

need another designer for our website. Currently, Anh Phan will be responsible for

Marketing campaigns and advertisements. We think that this will be fine in our early

stages, but to maximize our potential we will have to consult with an expert and possibly

hire one for our company.

54

3. We also do not have any current contacts within the industry, but we plan on finding a

few when further researching how to manufacture our product.

4. We are both ambitious students and creating a new innovative product has always been a

goal in the back of our minds. Although we have no emotional connections to pens or

office supplies, we think that the overall goal of creating a product with be sufficient to

fuel our desire.

5. Finally, we think that it will be moderately likely that we can put together a team to

launch and grow our product. In America, the unemployment rate could reach a low of

5.5%. In this, we believe there are a suitable amount of potential employees that we could

bring to our team.

Smith, Anne K. "U.S. Economy: Leader of the Pack." Kiplinger's Personal Finance 69, no. 1

(January 2015): 13-14.

Part 5: Financial Issues

Low Potential (-1) Moderate Potential (0) High Potential (+)

1. Initial capital

investment

High Moderate Low

2. Number of revenue

drivers (ways in which

the company makes

money)

One Two or three More than three

3. Time to break even More than two years One to two years Less than one year

4. Financial

performance of similar

businesses

Weak Modest Strong

5. Ability to fund initial

product (or service)

development and/or

initial startup expenses

from personal funds or

via bootstrapping

Low Moderate High

1) The initial capital investment of our product is expected to be moderate with our current

financial situation. For location, we plan to have an office in major city of the U.S. which

will cost around $18,000 annually for 565 sq. ft. of space. For production, we will

purchase the flavored plastic and outsource it to a pen manufacturer in the U.S. to ensure

that the product will be totally safe for the customers. According to Alibaba, the cost to

produce an individual ballpoint pen will be at $0.38 to produce 5,000 units. Although we

do not know the cost for flavored plastic, the total cost to produce an individual pen

should be less than $1. On the other hand, we can start with the social media page before

55

officially creating our website. This way we can save up money on online advertisement.

To hire a product designer, it will cost around $45,000 annually, which is around the

industry average. Nevertheless, it will be less expensive to find a professional product

design company and pay them a commission for the pen design. We would also need to

pay around $7,000 to hire an attorney to file our patent for the product. Other costs

include administrative costs, insurance, office supplies, and miscellaneous costs.

"Banner Pen." Alibaba.com. 2015. Accessed February 13, 2015.

"239 Washington, LLC." LoopNet. January 15, 2015. Accessed February 13, 2015.

"PolyFlav®: A Technology That Infuses FLAVOR into PLASTIC." Add The Flavor. 2009.


Quinn, Gene. "The Cost of Obtaining a Patent in the US." IPWatchdog. January 28, 2011.


Barringer, Bruce R. Preparing Effective Business Plans: An Entrepreneurial Approach. Upper

Saddle River, NJ: Pearson Prentice Hall, 2009. Print.

"Product Designer Salaries in United States - Design Salary Guide at Coroflot." Coroflot.


2) There is currently only one revenue driver for our product, which is through pen sales.

However, since we believe that the pen cap is the place where people are most likely to

chew on, the new line to produce replaceable pen cap will be a new revenue driver. The

combination of flavors can create excitement for our customers. If our product is ordered

in a large quantity, we can actually customize the product where an extra fee can be

applied. On the other hand, if the pen sale is excellent, we can design a flavored plastic

mechanical pencil version to increase our share in the market.

3) According to Hoovers, the net income of the industry will be at 2.8%. Since our pen will

be able to charge a premium price, we expect that the first year net income will be around

5% to 6%. It is not certain, but the initial capital investment will be expected at $150,000.

This includes one year of leasing a space, one year salary for the designer, the cost of

filing a patent, administrative costs, bills, marketing, and miscellaneous costs. Since we

would prefer to find a product design company, this amount will be less than expected.

We plan on selling our product for $1.49 each to retailers, and that leaves us with $0.30

of profit per pen. This leaves the breakeven point to be 500,000 units. Since there is a

large student population in New York City, if each college student purchases one pen, we

will make enough to cover our initial investment in less than a year.



4) Since there are no particular producer for this type of product, we have to analyze the

data from the pen manufacturing industry. As stated above, this is the highly competitive

56

field with many large corporations and small companies. Sale range varies between

companies. Even with a small amount of employees, there are companies that generate

millions in sales. Therefore, there are lots of opportunities for our product. For instance,

New Haven Warehouse Bic Pen, an American company with eight employees, generates

approximately $500,000 a year.

"New Haven Warehouse Bic Pen." Hoover. 2015. Accessed February 14, 2015.


5) Currently, we do not have financial resources from our personal fund to cover the initial

investment. However, we are looking for venture capitalists and investors to start this

business.

Overall Potential

Score (-5 to +1) Overall Potential of the business

Idea Based on Each Part

Suggestions for Improving the

Potential

Part 1: Strength of Business Idea High Potential •

Moderate Potential •

Low Potential •

We could make our product be a

luxury good. This means expert

craftsmanship by hiring an expert

in pen design.

Part 2: Industry - Related Issues High Potential •


Low Potential •

We could create an effective

marketing plan to differentiate

our product from the current

market.

Part 3: Target Market and

Customer-Related Issues

High Potential •


Low Potential •

We could create a larger brand in

which we could expand our

product line. This will help us

have a multiple target markets.

Part 4: Founder- (or Founders-)

Related Issues

High Potential •


Low Potential •

We could add a third member to

our team that has experience and

knowledge in the industry.

Part 5: Financial Issues High Potential •


Low Potential •

Like previously stated, we would

like to add a third member to our

team. It would help us

tremendously if we could find a

venture capital with a retail and

manufacturing backround.

Overall Assessment

High Potential •


Low Potential •

We should stay innovative with

our designs and product offering,

such as our flavors. We should

also have a desire to expand in

different geographic and

demographic areas.

57

Concept Statement

Product:

CAP will produce and distribute pens which the plastic will be toxin-free and infused with

flavor. In the future, CAP plans on extending the flavor choices to include fruits, mints,

chocolate, and coffee. This will allow the customers to chew on the product in order to relieve

their negative emotions without being exposed to toxic materials. With a variety of flavors and

an excellent design, CAP expects that the product will create a trend among young customers.

CAP will purchase plastic from a manufacturer that infuses the plastic with flavors. The material

will then be outsourced to a pen manufacturer in the United States. This will ensure that the final

product will comply with FDA standards and requirements because there are concerns with toxic

plastic products from foreign countries.

Target Market:

CAP will start production and sales in the United States. Specifically, New York City is our

geographical target market. Demographically, CAP will target college students. In New York

City, there are nearly 594,000 students, which is a large population for CAP. The distribution

will therefore mainly focus on campus stores. Moreover, back to school spending has been

increasing over the years which provide the target market with sufficient buying power to

purchase our product. Psychographically, CAP will target students who have disorders, nervous

habits, and/or stress. Research shows that 45% of teenagers are nail biters, and our pen can offer

them an alternative. Therefore, CAP will promote our pen to take place of existing problems.

Positioning Relative to Competitors:

The production and sale of CAP is a niche market within the industry of office and art supplies.

The overall industry is highly developed and competitive. Fortunately, CAP is offering a new

product that does not have any direct competitors. However, there are two indirect competitors.

ARK Company manufactures a pen for individuals with autism that is safe to chew. ChewStixx

creates chewable pen toppers and grips that can be placed on pens/pencils. Nevertheless, both of

these products are unflavored and quite expensive. Since CAP is chewable and tasteful,

consumers can chew on any part of the pen and enjoy the flavors while relieving stress, boredom,

and bad habits. Furthermore, our price will be less in comparison with the two indirect

competitors. These features will differentiate CAP among other competitors in the market.

Management Team:

The product is led by its founders, Colton Dershem and Anh Phan. Colton is a senior business

management and finance major with excellent experience in leadership and management. Anh

Phan is a senior finance and marketing major with expertise in budgeting and marketing plans.

He also has a major in Corporate Communication, which is an excellent combination for

developing an effective marketing communication strategy for the target market.

58

Concept Statement Feedback

*Notes Taken From Meeting*

What do you like about the product?

Dr. Grassmueck likes that our product fills a niche market. He believes that this will allow us to

exploit our target market and make profit.

What do you not like about the product?

Dr. Grassmueck dislikes the target market that we have chosen. He believes that our product

would be better suited for a younger audience. He suggested that we should consider marketing

it similar to what Crayola does. After all, if younger kids are chewing on their pens and pencils

then we should take advantage of this. On top of this, Dr. Grassmueck brought up the concern

of sanitation because of the product being placed in mouths.

What improvements or changes would you make?

Change the target market to fit a younger audience.

Dr. Georg Grassmueck Associate Professor and Department Chair

April 1, 2015 Lycoming College

Mrs. Lauri Kremer Associate Professor and Department Chair


*Notes Taken From Meeting*


Mrs. Kremer believes that our product is very marketable. She also agreed that we have a

good audience with plenty of potential customers. Also, that our market is very segregated

and books stores allow us to exploit this. She informed us that some bookstores partner with

Barnes and Nobles, which leads us to believe that if our product is successful we may be

allowed to use their supply chain.


Mrs. Kremer brought up sanitation when asked what she disliked. As you can imagine, when

something comes into contact with your mouth it could contain a large amount of bacteria.


Mrs. Kremer made a lot of good suggestions for us. She suggested that we should lower our

price in order for the total price (after tax) to be a whole dollar. She also recommended that

we incorporate holidays into our flavor selection. For example, we could have a peppermint

flavor for Christmas or a peanut butter and chocolate flavor for Easter.

59

Tricia Bausinger Campus Store Manager


Campus Store What do you like about the product?

It would act as a substitute with a nervous habit. I could see this as an aide to quit smoking.


Dental concerns, breakdown of material, possible choking hazard, sanitized/Germ free, and to

determine the mission of this project.


Make them natural/sugar-free and keep the price point low.

Tom Keiffer Business Consultant

April 8, 2015 Lock Haven University Small Business Development Center


The product is well thought out. The product offers an alternative to a well-known problem.

Colton and Anh identified a specific target market and narrowed it down to a specific area.

There will always be a cyclical need for the product when targeting students.


Capturing market share will be tough without significant cash investment.

Sanitation concerns with putting foreign objects in your mouth.


The major pen manufacturers like Bic would also fall into indirect competitors from the

viewpoint that they are also pens. Additionally, I would view ARK Company and ChewStixx

as direct competitors because they are specifically designed to allow you to chew on the pens.

Your competitive advantage is that yours are flavored.

Jerry Frear Director of Digital Marketing

April 8, 2015 Calypso Media Group


Everyone chews on their writing utensils. It’s a habit few ever break. And it’s almost

instinctive.


Broken plastic is a choking hazard.


Broaden the market for the product to help stem addiction. Pursue a relationship with Jelly

Belly to be able to have unique flavors and to cross promote.

60

Matt Shea Controller

March 24, 2015 Pen Company of America


I think the concept of a pen that can be chewed is an interesting one. We presently

make a Scented Pen that is non-toxic, but is not flavored, but smells. We often have people

say the scents make them feel like eating them. It would be interesting to add the ability to

chew on the product and get a flavor that matches the scent. I know people chew on pens all

the time so I think the concept of adding flavor to make the experience more enjoyable,

along with making sure it is FDA approved for safety is a good one. I think there is market

there, but as you note is a niche market. There are definitely good possible

applications. Smokers for example could use this to help them quit, by giving them either

the taste or possible nicotine infusion. Given the rise of cigarette alternatives, this could be

a huge additional market. I think there are other potential markets that could be explored as

there are many ailments where the proper additives may make this an attractive alternative

to bad habits or addictions.


The product does raise some potential concerns. The plastic will need to be

thoroughly vetted to ensure safety and testing can be very expensive. Also, pens often

require multiple plastic resins to accommodate various aspects of the pen. For example,

most internal mechanisms in click pens are made from acetate because the hardness of

acetate is required for repeated clicking. You would have to really consider design and

function of the pen to ensure you make the whole pen out of the chew safe material you are

proposing. Also, additives to polymers often change the molding characteristics of the

polymer. Our Snifty pens are much more difficult to make b/c the scented polymer is

difficult to mold and assemble. Polymers with additives such as the ones you propose often

change characteristics over time as the additives release out of the material, so you will need

to test environmental/time changes of the material. The internal refill of the pen which is the

writing component would need to be considered. If people are chewing on the pen, what

about if they chew through the pen to the refill. Is that non-toxic? What if it leaks all over

them? Finally, the children factor must be considered for safety. This product must be

carefully crafted to either avoid the children’s marker (sub-12) or be properly tested for

CPSIA compliance, which is stringent.


I think what I mention above to both questions suggest some improvements. A

focus on applications will really help you define the potential market better. You mention

nail biting, but what size market is that? That alone would not be enough of a market to

make this a business. I think you need to decide the style of the pen you are suggesting this

for as making the pen in certain styles may cause difficult in the molding/manufacturing

given a new polymer. People think pens are easy to manufacture, but they require some

expertise and you would need to work with a manufacturer while developing the polymer to

make sure it works with their process.

61

Consumer Survey and Analysis

Consumer survey link: https://www.surveymonkey.com/s/CLGFNWY

1) How often do you use a pen or pencil?

a. Daily

b. Weekly

c. Monthly

d. Other (please specify):

This screening question is to determine whether pens/pencils are the major writing tool of the

target segment. This will allow CAP to find out how often the product would be used.

From this question, CAP found that 93.33% of participants use pen or pencils daily and 6.66% of

participants use them weekly. These statistics inform CAP that the company’s suggested product

is very popular in the market. In turn, CAP believes that the whole target market could

potentially buy our product for daily use.

2) How often do you purchase pens or pencils?

a. One per semester

b. Twice per semester

c. Three times per semester


This question is to determine how frequently the customers will purchase the product, ultimately

showing CAP the demand of the target segment

From this question, CAP found out that the results were spread out throughout the timeframes.

However, on average the target buys the product around two times per semester. Ultimately this

allows CAP to know the expected frequency of purchases.

3) Where do you purchase your school supplies? (Check all that apply)

a. Campus store

b. General retailer (Wal*mart, Kmart, Etc.)

c. Specialized retailer (Staples, Office Depot, Etc.)


This question allows CAP to determine what distribution channels to use when selling the

product. This will also help determine what type of advertisements to pursue.

The statistics from this question has lead CAP to believe that having the product in general

retailers would be optimal because 50% of the target market shops at these locations. However, it

https://www.surveymonkey.com/s/CLGFNWY

62

is very difficult to get into bigger retailers as a small business. With that being said, CAP will be

distributed through campus stores because 36.67% of the target market uses this channel to buy

similar products. Specialized retailers only accounted for 13.33% of the target markets

preference.

4) How much money do you spend on school supplies per semester? (Excluding textbooks)

a. $0.00 - $9.99

b. $10.00 - $19.99

c. $20.00 - $49.99

d. More than $50.00

This question allows CAP to determine the buying power of the target segment. CAP wants to

look specifically into school supplies because it has a direct correlation with the product.

From this, CAP has found that the target market spends more on school supplies than originally

expected $20.00 - $49.99, and 10% spend more than $50.00. With higher consumer spending,

the target will be more likely to accept our price point.

5) What is a reasonable price for a good quality pen?

a. $0.99 or below

b. $1.00 - $1.99

c. $2.00 - $2.99

d. $3.00 or above

This question will determine a reasonable price in which the target segment would spend on the

product. Furthermore, the price should be strategically placed to compete with other products in

the market.

From this question, CAP has found that the majority of the target market will be willing to

purchase the product at our current price point. This is shown because 56.67% of the target

market has said that they would be willing to pay more than $2.00.

6) Rank your flavor preference

e. Fruity (Orange, Cherry, Strawberry, Etc.)

f. Minty

g. Coffee

h. Chocolate

i. List a flavor we should consider

63

This question is to find out what flavor(s) CAP should apply to the product, which is based on

the target segment preference. This gives CAP the opportunity to produce popular flavors in

order to satisfy potential customers.

CAP has learned that coffee is very popular among college students although all the other

choices were very close with the results. Other suggestions included multiple ice cream flavors

and also soda flavors. This gives CAP a good idea of how we should expand our product

offerings in the future.

7) How often do you feel stressed or nervous?

a. Always

b. Sometimes

c. Rarely

d. Never

This question will allow CAP to determine how frequently the product could be used to relieve

nervousness/stress in the target segment.

CAP has learned that 96.67% of the target market feels stressed at some point. This is great for

CAP because it means that our target market will be more susceptible to a stress relieving

alternative.

8) What do you do when you feel stressed or nervous? (Check all that apply)

a. Chew on something

b. Trim your nails

c. Doodle


CAP is asking this question to find out what habits occur in the target segment that the customers

could replace or exploit with the introduction of the product.

CAP learned that 73.33% of the target market chews on something when they are feeling

stressed. Ultimately, CAP was specifically looking for the results of this answer because it is the

most important factor. This is ultimately the number of our target that would be using our

product. However, CAP will also stress that it can encourage the other 16.67% to chew on your

pencil instead of other participating in other activities related to relieving stress.

9) How often do you find yourself chewing on your pen or pencil?

a. Always

b. Sometimes

c. Rarely

d. Never

64

This question is to analyze whether the target segment would like to use the product for chewing

because it is one of CAP’s main selling points.

CAP has learned that 66.67% of the target market chews on their current pencil at some point.

However, we think if we offered the 33.33% that say they do not a new option that includes a

flavorful design, which is what we are proposing to make, that this percentage would go down.

On the other hand, 66.67% of the target market is quite a high number for our potential.

10) What innovation do you think should be applied to pens or pencils? (Check all that apply)

a. Longer lasting

b. Flavorful

c. Toxin-free

d. Better Design

e. Other (please specify):

This question is to find out what additional values CAP should offer in order to satisfy the target

segment. Other suggestions will help CAP to improve the product’s original features and design.

From this question CAP found out what innovations they could possibly make in the future to

increase satisfaction. Also, we found that 50% of the market would like to see flavor added to

pens so we believe that this amount will be willing to purchase our product. Also, we may be

able to start a trend in order to gain more of the market.

65

Company Logo

The images below are the basic designs that CAP plans on using. These logos will only be used

until we have a professional design new one.

66

Design

The image below is the draft design for CAP’s product. This design will be an object for further

edition from professional designer. Moreover, the logo on the design indicates the original ideas

from the designer.

67

Website

The image below is just a rough idea of what our company website will look like. CAP would

like to acquire the domain name “ChewablePens.com” because it is not yet taken and will be

relatively easy to find when searching for.

68

Facebook

The image below is how the CAP Facebook page will look. CAP plans on adding further

information as more content is created.

69

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