Marketing Plan by Group 8

FLY-U

MKT 6301

Marketing Management - Prof. Abhi Biswas

Group 8 ▪ Adwait Joshi ▪ Chaitanya Charabuddi ▪ Chao-Hui Yin ▪ Ming Chang ▪ Yiwen Shao ▪ Yu-fan Huang ▪ Yu-Jou Tsai

Fly-U: Marketing Plan – Group 8

Table of ContentsINTRODUCTION AND PRODUCT DESCRIPTION 3 ..........................................................

PRODUCT: FLY-U 4 .............................................................................................HOW FLY-U WORKS: 5 ........................................................................................

SITUATION ANALYSIS: 6 ......................................................................................MARKET SUMMARY 6 .............................................................................................

Market Dynamics 7 .......................................................................................Market needs 9 ............................................................................................Market Size and Trends 9 ................................................................................Market growth 11 ........................................................................................

SWOT ANALYSIS 12 .............................................................................................Strengths: 12 .............................................................................................Weaknesses: 12 ............................................................................................Opportunities: 13 .........................................................................................Threats: 13 ................................................................................................

COMPETITION 13 ................................................................................................

MARKETING STRATEGY 13 ....................................................................................MARKETING OBJECTIVES 13 ......................................................................................TARGET MARKETS 13 ...........................................................................................MARKETING MIX 14 .............................................................................................

Product 14 .................................................................................................Promotion 16 ..............................................................................................Price 16 .....................................................................................................Place 16 ....................................................................................................

LIFE CYCLE 16 ..................................................................................................POSITIONING 17 .................................................................................................

FINANCIALS 17 .................................................................................................BREAK EVEN ANALYSIS 17 ........................................................................................SALES FORECAST 18 .............................................................................................EXPENSE FORECAST 20 ..........................................................................................

CONTROLS 21 ..................................................................................................

LIMITATIONS 21 ................................................................................................

CONTINGENCY PLANNING 21 ................................................................................

REFERENCES 23................................................................................................

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Fly-U: Marketing Plan – Group 8

Introduction and Product Description

The Umbrella is one of the oldest inventions by mankind and the oldest reference to a collapsible umbrella dates back to the 11th Century BC in China. The umbrella has been around for thousands of years protecting people from rain and sunlight. The word umbrella comes from the Latin word "umbra" which means shade or shadow. For almost 3000 years, the design of an umbrella has remained unchanged apart from a few minor improvements. Umbrellas used by people across the globe have a similar design - a folding canopy supported by metal ribs, which is mounted on a wooden, metal or plastic pole, designed to protect a person against rain or sunlight.

Following are some of the drawbacks of the most commonly used umbrellas-

● Windy conditions - The wind is no friend of the umbrella. An umbrella sees its demise when the wind picks up and destroys it.

● Potential danger to eyes - The umbrella is shaped in such a way that the protruding ends of its metal ribs are at our eye level which could potentially poke someone’s eye

● Single person use - The umbrella can effectively be used by only one person when there's a downpour. Moreover, we are expected to share the umbrella, when there are others around and it’s raining.

● Inconvenient – It is difficult to hold an umbrella when our hands are already busy with holding other things. For Example, it is very difficult for a single Mom holding her child in one hand and her bag/bags in the other to open and hold an umbrella. Umbrella also takes up a lot of space in our bags, when not in use.

● Wet umbrella - After the rain stops, we find ourselves stuck with holding the umbrella. Coming indoors out of the rain, the umbrella needs to be stowed away wet and the puddle it creates could potentially become a health and safety risk.

● Obstruction of view - There is nothing worse than having someone’s umbrella obstruct our view. Spectators will often use the umbrella as a shade during a sporting event such as a tennis match or soccer game. This works to the owner’s advantage but is annoying for the other spectators.

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Fly-U: Marketing Plan – Group 8

Product: Fly-U To solve all the aforementioned problems with the traditional umbrella and improvise upon it, we came up with a unique and innovative design for a new type of umbrella called Fly-U. The striking features of this umbrella are-

• It uses air and airflow as the canopy, rather than the traditional canopy made of cloth, plastic, leather, etc. So, Fly-U won’t get destroyed in windy conditions as it has no canopy and metal ribs. This also solves the problem of wet umbrellas creating puddles of water when indoors and also there is no risk of poking someone’s eye with the umbrella.

• Fly-U floats in the air by itself and there is no need for the user to hold it. It also automatically follows the user wherever he/she goes. So, there’s no need to worry about holding the umbrella when your hands are busy with something else.

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Fly-U: Marketing Plan – Group 8

How Fly-U works: Fly-U uses a novel technology - Air-Fan embedded on the top of the umbrella to isolate rain. Fly-U also has sensors to locate the user. It will automatically fly and follow the user at a set distance. The bottom fan is designed keeping in mind the safety of the user. User will not be hurt even when he/she touches the fan accidentally. The user can remain dry during rains and use Fly-U hands free. LED lights are provided around the outlets of the upper air-fan, for both entertainment and warning purposes. An optional decorator on the top is also offered, keeping customers preferences in mind. We offer more than 30 designs to choose from.

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Fly-U: Marketing Plan – Group 8

Situation Analysis: We are Start-up company focusing on innovations to solve everyday problems of people and improving their quality of life. We try and solve problems which generally go unnoticed and challenge ourselves to change the convention. Fly-U is one of the innovative product ideas that we are working on and we have reached a stage where we are ready to venture into mass production. We are planning to launch our product Fly-U in October, 2015 (Q4) nationwide in US and sell our product primarily through online channels for the first year. We will offer our product at physical locations if our performance is good in the first year. Currently, Fly-U is a crowd-funded product with an initial investment of $10,000 and we are looking for further investments to begin production and start the marketing.

Market Summary We have a product which can be sold anywhere, to everybody and which falls under the category of necessary accessories. So, we know where to sell and whom to target.

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Fly-U: Marketing Plan – Group 8

Market Dynamics

The average number of umbrellas people own world wide is 2.4 umbrellas, with people in Japan owning the most number of umbrellas. Countries where people own two umbrellas or more see over 150 days of rainfall per year. As you would expect, it seems there is a pattern of more umbrellas where there is more rain.

The most popular color for umbrellas is dark blue. In England, Korea and the US, it’s black. Also, results for men and women differed with men preferring black, and women favoring colors like red and green.

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Fly-U: Marketing Plan – Group 8

The umbrella most used in the world is the folding umbrella. one out of five Americans and British people answered that they don’t really use umbrellas at all.

The average number of umbrellas people buy in a year is 1.14 umbrellas. The average cost of one umbrella on planet Earth is $11.50 dollars. By country, the results were $13 in the US, $15.60 in the UK, $22 in Japan, $10.30 in Korea and $10.90 in China.

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Fly-U: Marketing Plan – Group 8

The people who most mind getting wet in the rain are the English, with around 40% answering that it really annoys them. Meanwhile, most of the people who answered that they don’t mind at all were from the United States. The people who most dislike getting wet are in their 40s. The results showed that people mind less, the younger they are.

Market needs We are providing all the Umbrella users with a unique product (Fly-U) aiding customers in improving their quality of life and creating value. The company seeks to fulfill the following benefits that are important to its customers:

• Durability – On an average, people buy at least 1 umbrella every year at an average cost of $13 in the US. We are providing our customers with a durable product which could last for years and withstand all weather conditions.

• Convenience – Fly-U is convenient to carry and easy to use. By using our umbrella, customers can have their hands free and 2-3 people can be protected from the rain at the same time. Customers can use Fly-U for many outdoor activities, such as, running, cycling, etc. and its also useful for women holding babies or/and bags in their hands.

• Safety – Providing a safe product and keeping customers safe is our utmost priority. With Fly-U there is no danger of accidentally poking someone’s eye out. It also increases visibility both for the user and also the passing-by vehicles. The innovative technology of the Fly-U is also safe and child-proof.

Market Size and Trends We will distinguish Fly-U by marketing it as one-of-a-kind product being introduced for the first time into the market and not previously available to customers. The number of umbrella users is not restricted to any one single country, continent, or age group, so there is a world market. Fly-U can be customized to satisfy the needs of all customer segments.

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Fly-U: Marketing Plan – Group 8

Though the basic design of the umbrella has remained the same for ages, there are many kinds of new and customized umbrellas in the market such as Automatic Umbrella, Bubble Umbrella, High Wind Umbrella, Artistic Umbrella, Paper Umbrella, Personal Parasol Umbrella, Stationary Parasol, and Golf Umbrella.

The annual retail market for umbrellas in the US alone is about $348 million, which amounts to 33 million umbrellas sold every year. Women umbrella shoppers contribute nearly 70% of these sales - $235 million. Therefore, the most important customer segment for Fly-U is Women and the marketing is being directed towards this segment.

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Fly-U: Marketing Plan – Group 8

Market growth In 2013, China was the main global supplier of umbrellas with a 92% share of global

exports. However, the fastest growing suppliers from 2007 to 2013 were Belgium (+37% per year) and Germany (+23% per year). Despite being the largest global producers of umbrellas, India and the U.S. did not export much of their production, meaning that it was domestically consumed.

The market has had steady growth throughout the world, the sales for 2008 in U.S. were over 33 million units. With competition from Belgium and Germany, which focus more on the quality rather than price, the prices of umbrellas are expected to increase in the future.

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Fly-U: Marketing Plan – Group 8

The market trends show that although umbrella market is mature and saturated, there is enough scope for a new entrant to succeed and sustain, provided the right market segments are targeted.

SWOT analysis The following SWOT analysis captures the key strengths and weaknesses within our company and describes the opportunities and threats facing our product Fly-U

Strengths: ➢ Unique and innovative product ➢ First mover advantage ➢ Ownership of key patents for the technology ➢ Creative and practical product designers ➢ High quality product

Weaknesses: ➢ High costs of R&D and manufacturing ➢ Start-up company – difficult to scale up, difficulty in branding ➢ Potential additional costs due to warranty provided

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Fly-U: Marketing Plan – Group 8

Opportunities: ➢ Huge market with large volume of mature customers ➢ Primary market of Women in US - $235 million/year ➢ Other market segments such as men, kids, youth, sports, etc.

Threats: ➢ Difficult to enter a saturated and mature market ➢ Product too costly for most of the customers ➢ Difficult to change the convention/trend ➢ Cheaper, easier and convenient alternative available (traditional umbrella)

Competition Fly-U will form a market of it own. There is no similar product available in the market and Fly-U offers a unique value addition to the customer. But, the biggest competition for Fly-U is the traditional umbrella. The traditional umbrella is cheap, familiar to people, also protects from sunlight, has no problem of battery life and its mass production is easy and fast.

Marketing strategy The key to the marketing strategy is focusing on the consumer segment of women, attracting them to our product, educating them about the product and convincing them to buy a Fly-U. We also have other potential target segments such as middle aged men, sportspersons, etc.

Marketing objectives • Create a sensation - Create awareness and educate people about our product • Target female population and make them want to buy our product • Successfully launch our product and sell • Maintain positive growth each quarter • Achieve a steady increase in the market penetration

Target Markets

The U.S. market for umbrellas is over $348 million and around 90% of this is coming from imports. Whatever is produced in the U.S. is not exported and is domestically consumed. Fly-U’s aim is to expand this market by promoting our innovative product. Umbrella sales to the customer segment of women in 2011- 2013 is about 235 million dollars, and is a great target segment for our product. Within this segment, women belonging to the high income households are the most potential customers who could find great interest in Fly-U for their convenience, safety and as a status symbol. Another potential customer segment is that of

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Fly-U: Marketing Plan – Group 8

young ladies, who feel the need for being trendy and fashionable. We could also target the customer segment of middle-aged-men, who enjoy outdoor activities like running, biking and walking dogs in the park. Fly-U will enable them to workout even on a rainy day and these people are rich enough to afford the premium price of Fly-U. We plan to target cities with high annual rainfall/snowfall and introduce Fly-U in the following 4 cities to test the market.

• Seattle • Washington • New York • New Jersey

Marketing Mix

Product

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Fly-U: Marketing Plan – Group 8

The product Fly-U- is an umbrella which uses air to split rain out, so people do not get wet in a heavy windy raining day. Also, Fly-U has with sensors to follow the user, so mothers do not have to hold an umbrella on a rainy day while holding a baby with lots of shopping bags. Then, we also have changeable LED lights on top of each Fly-U, so drivers can see clearly on a rainy day when pregnant ladies cross the road or people ride a bicycle. Package: Cartoon characters LED which is changeable. Brand name: Fly-U Tagline: “For the princess and you.”

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Fly-U: Marketing Plan – Group 8

Promotion Before launching the product, a promotional video will be released on the website which can be shared through social media like Facebook, YouTube, Google, etc. Fly-U will be open to be bought by pre-order. Then, Fly-U will be launched only in the United States online, and advertisements will be put on print and social media. We will launch Fly-U in the beginning of December to presell medium size Fly-U as a Christmas gift for 100 dollars. Since it is snowing and raining in winter, Fly-U will open the market for the need of umbrellas when you go outside. Furthermore, give a sample product of Fly-U to various famous bloggers to use Fly-U and write reviews, which would give more exposure.

Price The pricing objective is to maximize profit, and the pricing method used is perceived-value pricing. $100-150 is the original price, excluding any discounts, promotions, incentives, etc., and including 12 months guarantee, and selective top decorator (price of each is from $10-20 based on the design). The price will be $100 for the small size, $120 for the medium size, and $150 for the large size with 12 months guarantee. And if customers participate in our market research survey, we will provide warranty for 6 more months.

Place Fly-U will be launched nationwide in the United States. The sales channel for “Fly-U” will be online stores for the first year, and physical stores will be opened gradually depending on sales.

Life cycle

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Fly-U: Marketing Plan – Group 8

Now, our company is in the introduction level and trying to promote a brand new product to the market. However, the whole market is already in the maturity level.

Positioning Fly-U is being projected as a high-end product. Compared to the traditional umbrella, Fly-U is more fashionable and comes at a higher price.

Financials This section will offer financial overview of Fly-U related to marketing activities. We will address break-even analysis, sales forecasts, expense forecast, and indicate how these activities link to the marketing strategy.

Break even analysis

The break-even analysis indicates that $10,662 (91 units) will be required in monthly sales revenue to reach the break-even point.

Break-Even Analysis:

Monthly Units Break-Even 91

Monthly Sales Break-Even $10,662

Assumptions:

Average Per-Unit Revenue $118

Average Per-Unit Variable Cost $73

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Fly-U: Marketing Plan – Group 8

Sales Forecast According to the functions efficiency, we are offering three different sizes for our customers to choose. The estimated percentage of each kind of Fly-U is:

Sales of Fly-U begin in Q4 of 2015 and the estimated growth rate for the first year varies from 95% to 118%. We considered the affect of rainy season and the marketing campaign into the potential growth rate. After 1-year of operations, we expect the awareness of Fly-U to increase among our target customers and the estimated average growth rate for 2017 and 2018 is 112% and 117%.

Estimated Fixed Cost 4,083

Estimated Unit sales for the first 5 Quarters

Small Medium Sport Total

2015Q4 175 250 75 500

2016Q1 201 288 86 575

2016Q2 197 282 85 564

2016Q3 187 268 80 535

2016Q4 221 316 95 632

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Fly-U: Marketing Plan – Group 8

Estimated Unit sales from 2015 to 2018

The net profit for each umbrella varies from $35 to $66. The selling price would be $100 for the Small size and $120 for Medium size and $150 for Sports Version

Selling Price

The total sales forecast from 2015 to 2018 is as follows

As the result, the forecasted financial report is as follows

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Fly-U: Marketing Plan – Group 8

Expense forecast The manufacturing cost of an umbrella includes the cost of batteries, fans, motors and sensors. The estimated average cost of manufacturing per unit is about $73 and the estimated advertisement costs are $30,000 to $43,000.

2015* 2016 2017 2018

Revenue $58,750 $270,897 $303,405 $354,984

Other Revenue 100,000 0 0 0

Fixed cost (R&D) 6,000 6,000 6,000 6,000

Variable cost 32,250 167,149 187,207 219,033

Gross Profit $120,500 $97,748 $110,198 $129,951

Gross Profit Margin 205.11% 36.08% 36.32% 36.61%

Sales and Marketing Expense 30,000 43,000 37,000 37,000

% of Sales 51.06% 15.87% 12.19% 10.42%

Operating Income $90,500 $54,748 $73,198 $92,951

Operating Margin 154.04% 20.21% 24.13% 26.18%

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Fly-U: Marketing Plan – Group 8

Total Variable Costs

Controls The purpose of the Fly-U’s marketing plan is to serve as a guide for the organization. The following areas will be monitored to gauge performance:

• Revenues: monthly and annual • Expenses: monthly and annual • Customer satisfaction

Limitations ● Patent and Copyright. ● Expensive Technology – wide adoption can’t be expected. ● Difficult to change consumers’ behavior as they’ve been use to the traditional umbrella

for ages. ● Quality Control

Contingency Planning ● Plan A: We are going to monitor four Cities-Seattle, Washington, New York, Newark to

see which one is the bestseller. Then, we will open the first physical store within these cities after first year. Also if funded, we’ll increase promotion expenses and programs, to increase our brand awareness.

● Plan B: Sell the technology to a big company and keep further development of more unhandled products.

● Annual precipitation of rain/snowfall by City

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Fly-U: Marketing Plan – Group 8

*c for Centimeters

Day City Inches Millimeters

122/66.4 New York, NY 49.9/123.8 1268/314.5c

149/3 Seattle, WA 37.7/5 958/12.7c

114/8.1 Washington, DC 39.7/14.5 1009/36.8c

122/14.5 Newark, NJ 46.3/28.6 1175/72.6c

110/16 London, UK 23.3/18.4 592/46.7c

168/9 Vancouver, Canada 57.3/17.5 1457/44.6c

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Fly-U: Marketing Plan – Group 8

References

1. https://www.google.com/search?q=mothers+in+raining+day&espv=2&biw=1408&bih=702&source=lnms&tbm=isch&sa=X&ved=0CAYQ_AUoAWoVChMIwtWijN73yAIVT1GICh3bRg5b#tbm=isch&q=hold+umbrella&imgrc=6ROYSZGsfF6dqM%3A

2. https://www.google.com/search?q=young+lady+umbrella&espv=2&biw=1408&bih=702&source=lnms&tbm=isch&sa=X&ved=0CAYQ_AUoAWoVChMI_vfZ1M_8yAIVDspjCh0owwFs#imgrc=PXq3JGhdU4KwgM%3A

3. http://www.ehow.com/info_8307695_advantages-disadvantages-umbrella.html 4. http://sunnycomb.tumblr.com/post/90373669845/global-umbrella-survey-results 5. http://www.newyorker.com/magazine/2008/02/11/thinking-in-the-rain 6. http://www.statista.com/statistics/311398/retail-sales-value-of-women-s-umbrellas-

in-the-us/ 7. http://www.currentresults.com/Weather/Canada/Cities/snowfall-annual-average.php 8. https://en.wikipedia.org/wiki/

Comparison_between_U.S._states_and_countries_by_GDP_(nominal)

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