Marketing Plan

Cuddle Clones LLC

January 2013 - December 2018

1. Executive Summary

2. Situation Analysis

2.1. Company Overview

2.2. Market Overview

2.3. Target Customers

3. Goals

4. Strategy

4.1 Target Market

4.2. Value Proposition

5. Tactics

5.1. Product

5.2. Service

5.3. Brand

5.4. Pricing

5.5. Incentives

5.6. Communication

5.7. Distribution

6. Exhibits

1. Executive Summary

Cuddle Clones produces, customizes, and markets plush replicas of consumer’s

pets. Cuddle Clones offers a unique way of memorializing a pet. The clone is designed to

have the same fur markings, ear and tail positions, and body style of the consumer’s pet.

Cuddle Clones has developed a revolutionary way to develop customized replicas.

Proprietary technology allows for the body and general fur color to be produced through

a photo of the pet. Cuddle Clones offers a more customized, cheaper alternative to other

types of pet memorials. The product is more convenient than alternative memorials, and

can be given to children or as gifts. A clone can also be created while a pet is still alive,

and can be given to children that are allergic, or to a family member that is going to be

away from the pet for an extended period of time, such as going to college.

Cuddle Clones target customers are pet owners that identify their pet as a

member of the family, as 85% of pet owners surveyed feel this way. Pet owners comprise

57% of the U.S. population and represent a market opportunity of 39.5 billion dollars.

The long-term goal is to increase the net income of the business from $9,000, to

$3.5 million within the next five years. In order to accomplish this goal, Cuddle Clones

plans to increase their customer base, as well as reduce the costs to create the product.

Sales began in 2010 for the product in an introductory product development

phase. With $300,000 of capital secured, Cuddle Clones will be opening their own

manufacturing plant in China, which will increase the margins for making the product

from 1.2% to 13.4%. With capital secured from business competitions, Cuddle Clones

plans on investing in advertising through social media, pet publications, and veterinary

offices.

Cuddle Clones offers a unique set of benefits to consumers that need a way to

memorialize their pets. Alternative methods are either prohibitively expensive or are not

customized to the consumer’s pet. Cuddle Clones provides a combination of both

affordability and customization. Offering a superior quality product will create brand

loyalty to the product. Cuddle Clones will convey the brand to consumers through the

use of their logo.

This plan outlines key marketing activities for the period January 2013 –

December 2018. Cuddle Clones plans to collaborate with a larger company, such as

Build-A-Bear, or be purchased by a larger pet or plush company as a strategic

acquisition.

2. Situation Analysis

2.1 Company Overview

Currently, Cuddle Clones operates in an office located in downtown Louisville,

Kentucky. The staff is comprised of three members. Chief Operating Officer, Victor

Dawson, has the responsibility of product sourcing with Asia, China, and Latin America

(Cuddle Clones). The COO, Jennifer Graham’s purpose is to set up the logistics for

creating mass, customized plush animals. Graham actually creates the clones, and is

accountable for the creative aspects of the business with the title of Chief Cloning

Officer. Graham is also the Chief Financial Officer for the business. Adam Greene is

Cuddle Clones’ Chief Marketing Officer, and focuses on advertising Cuddle Clones’

products through digital media and other sources.

The Cuddle Clones team possesses strong knowledge and backgrounds relating to

their relative positions. Victor Dawson was the Senior Vice President of Twinn Doll

Company, which specializes in creating customized dolls for their consumers. Dawson’s

background in operations of a mass customization company gives him unique

experience in the field. Jennifer Graham, the company’s CFO and CCO, brings a

background in entrepreneurship, and has created a successful consulting company in

her past. Adam Greene’s experience is in digital marketing, and is skilled in the use of

technology to promote a brand. These individuals have combined their love of animals,

with their business backgrounds, to create a unique product offering for the consumer.

Makespace serves as Cuddle Clones’ website development partner, and has

recently redesigned the company logo. The logo serves as a representation of the

company by showing a plush dog and cat with hearts on their chests (Exhibit 5). The

heart is meant to convey the value of the product offering. On February 19th, 2013 the

trademark review process was completed, and Cuddle Clones was approved for their

trademark in the plush industry for their logo.

The company is not currently partnered with any suppliers, but does contract

with an independent manufacturer. An objective for the company is to partner with

suppliers to receive bulk discounts on the stuffing and fur used to make the product.

Another logical collaborator would be UPS. Partnering with the logistics giant would

drastically cut distribution costs.

Cuddle Clones has won several business plan competitions, which allows access

to the capital required to fund company-operating expenses. On April 17th, 2010 the

company was awarded $5,800 in a competition, which allowed prototype production to

begin. On October 16th, 2010 the company won another competition, earning another

$8,000, and put the money toward market research. The largest influx of capital came

from winning the 2011 Idea State U competition. Cuddle Clones was awarded $41,800,

which was used to finalize the website and set up the e-commerce support needed to

accept orders and payments (Cuddle Clones).

Core Competencies

Cuddle Clones currently offers products unavailable to consumers before; plush

replicas of their beloved pets. While still in the development stage, the company holds

the proprietary technology needed to produce the plush products. A template is used

once a customer submits a photo of their animal. This technology significantly speeds

up the process of creating the plush, and helps provide a barrier to entry for other

competitors.

While Cuddle Clones marketing strategy is still in development, the company has

already set the plan in motion. Search engine marketing and social networking sites will

be the focal points of their marketing plan. The company hopes to expand to pet retail

stores in the future, as well as market in pet specific publications (Cuddle Clones).

2.2 Market Overview

2.2.1 Customers

Cuddle Clones offers a unique product to a specific subset of the pet owning

population; customers that feel their pets are part of their family. Cuddle Clones

provides value to pet owners in ways that have previously not existed. Whether

memorializing a deceased pet, or just creating a clone out of sheer love, Cuddle Clones

provides a unique way to allow a pet to stand the test of time. Since Cuddle Clones have

a purchase price of $249, it is necessary to narrow potential consumers down to those

consumers that consider pets as a part of the family. The company also targets those

households who spend the greatest amount of money on their pets in a given year.

Idaho, Utah, Colorado, Michigan. Wisconsin, New Hampshire, Vermont, Massachusetts,

and Rhode Island had the highest average of dollars spent on their pets per household in

2010, between $510.20- $548.90 (Exhibit 1). When comparing the average amount of

money spent on a pet, two of the states also ranked highest among national averages for

disposable income per household. Massachusetts and Rhode Island appeared on both

lists (Exhibit 2). Since Cuddle Clones is a luxury item, the most logical geographic areas

to concentrate sales and marketing efforts would be in Massachusetts and Rhode Island.

Ethnicity also plays an important factor in relation to pet ownership. 64% of Caucasian

individuals in the United States own a pet, compared to 30% of African Americans and

39% of Hispanics. Household income directly correlates to the likelihood of pet

ownership. 69% of households making over $100,000 per year own a pet, compared to

only 45% of households making less than $30,000 (Exhibit 4).

When Pew Research Centers completed a survey asking participants if they felt

the family dog was a member of the family, 85% of the 1,181 participants answered yes.

Women had a higher rate of identifying their dog as a family member, with 89%

believing so. Males identified their dog as a family member 80% of the time. 90% of the

individuals in the 18-29 age bracket indicated they thought of their dog as a family

member. 82% of 30-49 year olds believed so, and 85% of the 50-64 age bracket said they

thought of their dog as a family member. Participants living in rural areas were least

likely to identify their dog as a member of the family, with only 73% identifying as such.

Urban participants were less likely to own a dog overall, but were much more likely to

think of their dog as a family member, with 90% believing so (Exhibit 3).

2.2.2 Collaborators

In order to deliver the highest value to consumers, Cuddle Clones must utilize a

variety of collaborators. In June of 2012, Makespace, Cuddle Clones’ website

management partner, developed a new website and logo for the brand. The updated logo

helped to communicate the value of the company through a single image, a dog and cat

with hearts on their coat markings. There are two major industries where Cuddle Clones

could find collaborators; the pet care industry, and the plush industry.

The pet care industry is worth an estimated $39.5 billion and has three major

players. Nestle has 36.4% of the market share in the pet care industry (Market Line).

Collaborating with the largest company in pet care would give Cuddle Clones the highest

potential exposure. Cuddle Clones’ major competitor would be Build-A-Bear Workshop.

Partnering with Build-A-Bear would allow Cuddle Clones to rapidly expand current

product offerings, and immediately expand distribution channels. A partnership with

Build-A-Bear would also leverage economies of scale and allow for lower priced product

offerings.

In the stuffed animal market, Cuddle Clones falls into a niche of collectables. The

product delivers high value to the customer but is also at the high end of the price scale.

Marketing the products in stores such as FAO Schwartz would allow the Cuddle Clones

to maintain a prestigious image. Collaboration with FAO Schwartz would also rapidly

expand public awareness of Cuddle Clones, and showcase the product offering.

Product distribution is a major component of Cuddle Clones’ business, because

the plush collectables can take up to 6 weeks to build. Currently, shipping is included in

the $249 purchase price. Collaborating with a company like UPS, which has a hub

located in Louisville Kentucky, would be extremely valuable to Cuddle Clones. Cuddle

Clones would also be able to negotiate bulk price discounts if UPS was an exclusive

shipping partner.

If Cuddle Clones were able to expand product capacity, partnering with a

wholesaler would make sense. QVC or Pet Smart would make excellent wholesale

partners. The partnership would bring about free marketing and publicity for the

company. The stuffed animals would still need to be personalized, but potential

consumers would be much more familiar with the brand and product offering.

2.2.3 Competitors

Cuddle Clones is in the market of stuffed animal pet memorials. Whether the pets

are still living, or already deceased, there are several memorial alternatives for potential

consumers to choose from.

One major competitor of Cuddle Clones is Petco. While most consumers know

Petco as a general needs animal store, they also offer a pet photography service. Petco is

located in all 50 states, and originally became a publicly traded company in 1994. The

company returned to private ownership in 2000. The most recent public financial

reports of the company list sales at $775,000,000 (Marketline). While it is not clear

what percentage of Petco’s revenue is generated from pet photography, they are a very

large company and should be viewed as a strong threat. Petco targets all pet owners by

offering a variety of products and services including, toys, food, grooming services, and

adoption. They position themselves as a one-stop shop for consumer pet needs. Petco

does not specifically focus on pet memorial offerings, which is an advantage for Cuddle

Clones. Consumers are often looking to memorialize their pets after they have passed,

which makes pet photography useless. Petco advertizes using traditional media outlets;

mostly television.

Another lesser-known competitor of Cuddle Clones competes directly in the pet

memorial market. Buddies Beloved Pet Keepsakes is owned by the parent company

Meadow Hill Corporation. This subsidiary of the company focuses on memorializing

pets by creating an imprint of their nose or paw to be worn as jewelry. Buddies Beloved

Pet Keepsakes are sold through a variety of cemeteries that offer pet burial. The

company markets themselves as being able to satisfy the specific need of honoring a pet

throughout their life, and after they have passed. Meadow Hill Corporation poses an

especially strong threat to Cuddle Clones because the company is offering products to

the same target market. The two companies market themselves as providing a

specialized token of the consumer’s pet. Buddies Beloved Pet Keepsakes are made from

either silver or gold, and range from $131-$742 for silver, and $603-$1,926 for gold

(Meadow Hill). These keepsakes come at a much higher price point than a Cuddle Clone,

which is priced at a flat $249. Since Buddies Beloved Pet Keepsakes targets the most

high-end consumer, Cuddle Clones has the opportunity to reach consumers with more

moderate-income levels. Buddies Beloved Pet Keepsakes focuses on offering their

product to consumers after their pet has passed away, while Cuddle Clones offers their

product to memorialize both living and deceased pets.

2.2.4 Context

The changing population will affect Cuddle Clones in a variety of ways, including:

Technological: Cuddle Clones has proprietary technology for their customization

process. When a consumer orders a cuddle clone, their pet’s photo is used to

create the body shape and fur colorings of the clone. This technology is crucial in

Cuddle Clones success because it allows for mass customization more quickly and

at lower cost than competitors. Technological advancements also play a role in

the distribution process. UPS brands themselves on their logistics skills, which

Cuddle Clones could use to save money and time. Packages can now be shipped

using mobile technology. To accommodate small businesses, UPS will pick up

packages on-site (Getting Started).

Cuddle Clones is also able to accept payments directly on their website through

PayPal. PayPal is currently owned by Ebay, and allows websites to accept

payments electronically. This technology is available in over 190 countries

(PayPal). Started in 1998, the company has grown very quickly. In 2006 PayPal

developed the technology to allow consumers to use the technology on their

mobile phones to make purchases. The strength of PayPal’s technology comes

from the ease of use in allowing businesses to set up online payment methods. In

today’s society, credit cards have become the preferred method of payment, so it

is crucial for Cuddle Clones to offer this service to their customers.

Sociocultural: The aging population will have an impact on the buyer segment for

Cuddle Clones. Also, couples having fewer children will increase the likelihood of

pets being considered part of the family. Birth rates are at their lowest levels in

40 years. In 1969, children ages 0-17 made up 36% of the total population. That

number fell to 24.2% by 2009 (childstats.gov). As the household dynamic

changes, so too will household spending habits. In 2013, average household

spend on pets was well above $500 annually (SimplyMap). Less children means

more disposable income and increases the potential for household pet ownership.

Consumers are also becoming more attached to their pets. 85% of participants in

a Pew Research study identified their pet as a member of the family (Exhibit 3).

These consumers will need a way to memorialize another member of their family.

With 57% of the U.S. population owning a pet, the market opportunity is an

estimated at $39.5 billion (MarketLine).

Regulatory: Payroll and income tax increases will lower the amount of

discretionary income consumers’ posses. In 2013, marginal tax rates increased

for nearly every American citizen. Since 1990, the top marginal tax rate has gone

from 28%, to 40% in 2013 (Berkeley.edu). As taxes increase on consumers, they

will have less discretionary income to spend on pets.

In 2012, states lost an estimated $23.3 billion in potential revenue from not

collecting taxes on e-commerce (Collecting E-commerce Taxes). Currently

retailers are only required to pay sales tax in states where they have an office or

store. Legislators are currently in the process of passing the Marketplace Fairness

Act, which will require sales tax to be paid on all online purchases. This is

relevant to Cuddle Clones because their product is already priced at $249,

consumers may be deterred from purchasing the product if they have to pay a

sales tax on top of the purchase price. Cuddle Clones would lose money on the

product if they paid for the sales tax themselves.

Physical: Deteriorating health conditions of potential consumers will force them

to reallocate expenses from discretionary income to health related expenses. As

consumers age, they will incur higher medical costs. Government census data

shows Medicare membership enrollment at its highest levels ever. In 2002, the

elderly population (65+) made up about 13% of the population but accounted for

36% of U.S. personal healthcare spending to the amount of $11,089 (ahrq.gov). A

major driver of healthcare costs are chronic conditions, which are much more

prevalent among the elderly. Healthcare spending has gone from $133 per capita

in 1960 to $8,187 per capita in 2011.

Economic: The health of the United States economy impacts Cuddle Clones’

customers. According to the U.S. Inflation Calculator, inflation rates hovered

around 3% from 2000 to 2012 with an exception in 2009. Over that same time

period, World Bank data shows U.S. gross national income moving from $38,360

in 2003 to $48,620 in 2011. The 25% increase in gross national income outpaces

the inflation rate denoting higher levels of discretionary income for consumers.

It is not known what areas of the economy the discretionary spending is going

towards, only that consumers have access to higher levels of expendable capital

than they did 10 years ago.

Cuddle Clones is targeting pet owners with incomes over $100,000. Families

earning between $70,700 and $142,700, pay 25% in federal income taxes. If taxes

are increased, which is a suggestion for the next federal budget; it could reduce

Cuddle Clones target markets disposable income.

SWOT Analysis

Strengths

Proprietary development technology necessary to ease product production.

Efficient employees with the experience in each of their fields of expertise.

The abilities to deliver value in the product offering.

Capital needed to fund the development of the brand through business

competitions.

Weaknesses

Lack of an efficient supply chain.

Only three employees run the company so there is a less specialization than at a

larger firm.

The company just started their marketing, which is limited to social networking

sites and the company website.

Opportunities

A patent on the company’s developmental technology would decrease potential

competition.

Strengthening the brands identity will make customers loyal to Cuddle Clones

and less likely to purchase from competing firms.

Large market potential with consumers spending $39.5 billion dollars annually

on pets.

Rapid market growth with 85% of pet owners identifying their pets as family

members.

Threats

Larger firms creating a similar product offering at a lower price point, because of

a streamlined supply chain.

The economic recession may lead to a decline in consumer demand because the

product is viewed as a luxury and not a necessity.

2.3 Target Customers

Cuddle Clones’ target market are consumers who value the product because it

memorializes their pet. The product would be considered a keepsake for those

consumers. Individuals who consider their pet to be a member of the family are more

likely to purchase a Cuddle Clone. These consumers are more likely to purchase a

Cuddle Clone than an alternative way to memorialize their pet, such as through paw

print jewelry, because the clones are personalized to look like their pet. From eye color

to fur markings, Cuddle Clones offers an unrivaled customized product to consumers at

a lower price point than their competitors.

This customer segment is the most attractive because of the high percentage of

pet owners that consider their pet a family member. Over 85% of dog owners believe

their pet a member of the family (Pew Research Centers). The majority of pet owners

who fall into this category live in urban areas, and as such, are more likely to have access

to the digital media channels Cuddle Clones is currently marketing on. Focusing on

urban areas is also helpful because those individuals have a higher average income than

those living in rural areas, increasing the likelihood of pet ownership.

Consumers that purchase Cuddle Clones as a way to memorialize their pet are

more attractive than those that buy the product as a gift for others. This is because the

cost of the product, while lower than their competitors, is still quite high at $249. The

high price point makes the product less likely to be purchased as a gift. Also, the length

of time needed to create the product makes it less likely to be purchased for others. The

product takes, on average, 6 weeks to create, and needs to be ordered well in advance of

the time the gift is going to be given. Alternative pet memorials are less attractive to

consumers than Cuddle Clones because of their higher prices, lack of customization, and

consumer’s lack of awareness about the products.

People who consider their pet part of the family develop strong emotional bonds

with the animal. Those emotional bonds are the most significant reason why Cuddle

Clones should target this specific consumer segment. Emotion can play a significant role

in making purchase decisions. If the consumer believes a Cuddle Clones product will

alleviate some of their grief, the relevance of price drops drastically.

3. Goal

Cuddle Clone’s desired outcome for creating stuffed animal replicas of

consumers’ pets is to increase net income. Within five years, the goal is to increase net

income from $9,000 to $3.5 million.

Customer Objectives. In order to achieve the ultimate goal, Cuddle Clones

will employ customer objectives in the form of increasing product

awareness to encourage consumers to make a first time purchase in the

product category, or switch from competitors’ product. Currently, similar

plush animals of the same breed of the pet, without specific customization,

can run consumers $500. Cuddle Clones is offering consumers a superior

product at half of the purchase price of comparable products. Currently,

Cuddle Clones does not use any paid advertising, which will change now

that more than $300,000 has been secured from investors. Over the next

five years, the company will use pet focused events and publications to

reach the target audience. The hope is that these marketing efforts will

increase the company’s units sold from 3,000 to 100,000 in the next five

years.

Collaborator Objectives. Cuddle Clones’ current collaborator is an

independent company that supplies the shell of the animal plush.

Eventually, Cuddle Clones plans to open a manufacturing plant in China.

Until then, it is important to streamline interactions with their current

collaborator. To accomplish this, Cuddle Clones needs to increase the

number of orders from 3,000 to 100,000. Increased orders would allow

for bulk discounts and a lower overall cost structure.

Internal Objectives. Cuddle Clones’ current objectives are to lower

production costs and streamline operations. In order to accomplish these

objectives, the company wants to open and operate their own

manufacturing center in China, which will allow them to stay in control of

quality standards (Eigelbach). Cuddle Clones wants to lower their total

production costs from 79.7% of the product cost to 64.1% over the next five

years (Graham).

Competitive Objectives. The company will also use competitive objectives

to assist them in reaching their ultimate goal. Cuddle Clones plans to

create a barrier to entry through their proprietary production process,

which includes software development and design patterns (Graham).

These features will allow the company to maintain high quality products,

while increasing the net product margins from 1.2% to 13.4% over the next

five years (Graham).

Through the establishment of customer, collaborator, company, and competitive

objectives, Cuddle Clones will focus on accomplishing the ultimate goal of increasing net

income from $9,000 to $3.5 million. Individual steps provide measurable goals of

profitability, with timelines, to assist in the completion of the company’s desire to

increase net income.

4. Strategy

4.1. Target Market

4.1.1. Customers

Cuddle Clones target market is pet owners who consider their pet to be a member

of the family and want to memorialize them. The product is unique because it provides

value after a pet is deceased, or while it is living, and is customized to look like the

consumer’s pet. 69% of households making over $100,000 per year own a pet and 85%

of pet owners identify them as a family member. Households with the most disposable

income are the most likely to purchase the product.

Geographically, the target market is consumers in the United States with special

attention being paid to Idaho, Utah, Colorado, Michigan, Wisconsin, New Hampshire,

Vermont, Massachusetts, and Rhode Island. These states, on average, spend the greatest

amount of household income on their pets. Massachusetts and Rhode Island also qualify

as two of the states with the highest averages of household disposable income.

4.1.2. Collaborators

Cuddle Clones’ primary collaborators are Makespace, a website development

company, an independent contractor in China, and UPS. Since the business is currently

only being operated online, a strong web presence is crucial. Makespace created a new

logo for the company, which aims at cultivating value and loyalty toward the brand. The

independent contractor in China creates the bodies of the clones using proprietary

technology. This process allows costs to be reduced, increasing margins on the product.

The larger the customer base grows, the more efficiently the clones can be produced.

UPS is also a collaborator, with a hub located in the same city as Cuddle Clones’

corporate headquarters. A relationship with UPS would be beneficial because Cuddle

Clones would be able to reduce shipping costs. With a large customer base, agreeing to

only ship through UPS would be mutually beneficial. The best way to rapidly expand the

growth of the business would be to collaborate with a business consumers are already

aware of, like Build-A-Bear or FAO Schwartz.

4.1.3. Competitors

Competitors include companies in the pet memorial industry, such as Petco.

Petco offers pet photography, which consumers use to memorialize their pets. Buddies

Beloved Pet Keepsakes also offers consumers a way to memorialize their pets, in the

form of paw print jewelry.

Consumers are likely to choose a way to memorialize their pet based on price.

Buddies Beloved Pet Keepsakes retails at a much higher price point than Cuddle Clones’

$249. Consumers also may be interested in a product that is more family friendly, such

as a stuffed animal. A stuffed animal clone of a family pet may be more attractive than

fine jewelry, or a photograph, because jewelry or photographs must be purchased while

the pet is still alive.

4.1.4. Context

With the downturn in the economy, consumers are looking for cheaper

alternatives to memorialize their pets. Compared with other methods, Cuddle Clones

offers a more affordable product. With 85% of pet owners identifying their dog as a

member of the family, the need for pet memorials can’t be ignored. Congress in

currently looking into taxing e-commerce sites, which would add a tax to all Cuddle

Clones products sold online. Since the target market has incomes over $100,000, it is

likely that their marginal tax rate is going to increase, meaning target consumers will

have less discretionary income. This makes Cuddle Clones a more attractive option

because it is more cost effective than other ways of memorializing a pet. The ability to

customize the clones on a mass scale is in an important factor in reducing costs. Having

proprietary technology to create the clones is essential in delivering the product at a

lower price point than competitors.

4.2. Value Proposition

4.2.1. Customer Value

4.2.1.1. Value Proposition

The Cuddle Clones plush offers a variety of benefits to target customers:

Excellent Aesthetics. The look of Cuddle Clones is that of a soft plush, designed to the look of the consumer’s pet, and is much more attractive than current taxidermy offerings.

Increased Customization. The Cuddle Clone will be specifically designed to match the consumer’s pet. The fur markings, eye color, and tail position will all be tailed specifically to each consumer. These features are currently unavailable in existing products.

Reduced Cost. Similar types of replica plush products that feature less customization are, on average, twice the price of a Cuddle Clone. Other methods to memorialize pets can run into thousands of dollars.

4.2.1.2. Positioning Statement

The product will be positioned as a unique way to memorialize a pet. Cuddle

Clones is the plush that allows a customized memorial for people who want to enjoy

their pet even after they are gone.

4.2.2. Collaborator Value

4.2.2.1. Value Proposition

Cuddle Clones offers the following benefits to independent contractors:

A larger customer base than competing firms. Cuddle Clones are offered at a lower price point than competing products, which translates into higher demand for the product.

Higher margins. With proprietary control over production technology, Cuddle Clones contractors are able to produce the plush at lower costs than competitors, resulting in higher margins.

Barriers to entry for other contractors. Due to the proprietary technology that Cuddle Clones employs with their collaborators, other contractors will have difficulty entering the market.

Increased productivity. Cuddle Clones’ proprietary technology creates the body shape of the animal through the use of computers. Using computers allows the contractor to complete orders more quickly, and with fewer errors, thus generating higher net income.

4.2.2.2. Positioning Statement

The product will be positioned as a profitable product for manufacturers to

produce. For independent manufacturing contractors, Cuddle Clones is the best product

to create to memorialize a pet because of access to a larger customer base, and the

potential for higher margins.

4.3.2. Company Value

4.2.3.1. Shareholder Value Proposition

In the first year of operation, Cuddle Clones had revenues of around $800,000

with gross profit margins of 20.3%, and net margins of 1.2%. In the next five years,

projected revenues are in excess of $25.9 million, gross profit margins of 35.9%, and net

margins of 13.4%.

4.2.3.2. Shareholder Positioning Statement

The product will be positioned as a unique product that provides value to

consumers resulting in rapid market growth. To investors who are interested in growth

potential, Cuddle Clones offers an opportunity to participate in the $39.5 billion pet

market. Proprietary technology incentivizes consumers and independent contractors

like no other company in the marketplace.

5. Tactics

5.1. Product

Currently, Cuddle Clones are available in both dogs and cat styles. The plush

replicas are highly customized to mimic the look and feel of consumer’s pets; matching

eye color, fur markings, ear and tail position, and body type as closely as possible.

Proprietary technology is used to design each body style based on a picture uploaded to

the website by the consumer. The clone is a way to memorialize the consumer’s pet. The

clones are made from a durable body frame filled with soft cotton, to ensure product

quality and longevity.

5.2. Service

Three employees are involved in the process of creating the Cuddle Clones. Each

employee specializes in one of the areas of finance, marketing, or cloning, the actual

process of making the clone. If there is any issue with a clone when delivered to the

consumer, employee contact information is provided on the website, to allow for swift

resolution of any potential service issues. Cuddle Clones provides service to its

collaborators in the form of access to a large customer base, and potential increases in

the demand for their products and services. A larger customer base, and increased

demand, would allow Cuddle Clones collaborators potential increases in revenue.

Collaborators would also be able to leverage economies of scale to lower manufacturing

costs, resulting in higher gross margins, and net profit.

5.3. Brand

Cuddle Clones uses their name to establish brand identity. The product is a clone

of consumer’s pet, in the form of a plush, which can be cuddled with. The name of the

company allows consumers to instantly conceptualize the product offering, immediately

adding value. Cuddle Clones recently created a new logo for their company featuring a

stuffed cartoon puppy and kitten with hearts on their chests. The logo is meant to

symbolize the love that consumers will feel when they own a replica stuffed animal of

their pet.

Cuddle Clones attempts to create meaningful brand associations with their

products by reminding consumers that the products are a way to memorialize, and show

love for their pets. The emotional benefits consumers receive from owning a Cuddle

Clone establishes and reinforces the value of the product.

5.4. Pricing

Cuddle Clones are currently available to consumers at only one price, $249. With

the high cost associated with producing such a small number of orders, Cuddle Clones

only nets $2.99 per order, or 1.2%. With a growing customer base over the next five

years the company plans on increasing their net income to $33.37 per unit, or 13.4%. If

Cuddle Clones is able to lower their overall costs it will give them flexibility to offer the

product at a lower price point to appeal to a larger customer base.

5.5. Incentives

Incentives for customers. Currently Cuddle Clones is unable to offer incentives to

consumers. In the future, free shipping may be used as an incentive for purchase.

Also, a discount can be provided for purchasing multiple clones once production

capacity expands, and the company opens a production facility in China.

Because the cost of creating the clones is so high, other incentives are unable to

be offered at this point.

Incentives for collaborators. With a collaboration with UPS, Cuddle Clones

would agree to only ship their product through UPS for an agreed upon lowered

rate. This would be mutually beneficial for both companies. UPS would have

increased orders, and Cuddle Clones can lower their shipping costs. Cuddle

Clone’s independent contractor in China has incentive for producing the product

at a lower cost. If Cuddle Clones could be produced for a lower cost, the company

would have the ability to offer the product at a lower price to consumers, which

may increase demand.

5.6. Communication

5.6.1. Consumer Communications

Consumers can learn about the product directly from Cuddle Clones website. The

website explains how to order the product, beginning with emailing several photos of

the pet and detailing several desired traits, and then submitting their payment through a

PayPal account. In the future, Cuddle Clones plans to use marketing in pet magazines

and social media. Cuddle Clones uses a pull strategy to directly engage consumers and

increase the demand for a way to commemorate a pet.

Direct-to-consumer (pull) communications

Logo. The image of a puppy and kitten pictured in a cartoon image with hearts

over their chests is meant to evoke emotion from the consumer. The notion that

pets are considered family members, and thus be honored accordingly, is

essential to create demand for Cuddle Clones.

Media. Cuddle Clones plans on utilizing social media to spread awareness about

the product. With recently acquired capital, the company plans on advertising in

pet publications and veterinary offices.

Message. Cuddle Clones is sending the message to remind consumers that their

pets are family members and need to be memorialized accordingly.

5.6.2. Collaborator Communications

Cuddle Clones plans on using veterinarian offices to spread the word about their

product. Vets will be inclined to inform their clients about Cuddle Clones as a way to

help them cope with their grief of losing a pet. These individuals then may be more

likely to adopt a new pet, which would benefit the veterinarian.

Media. Print advertisements will be placed in vet offices to inform them about the

benefits that Cuddle Clones offers. Both the vet and the pet owner will see the

advertisements, which will double effectiveness.

Message. Cuddle Clones’ message focuses on the love that consumer’s have for

their pets, and their need to memorialize them. This may help consumers cope

with their grief.

5.7. Distribution

Cuddle Clones are available through a direct channel, meaning that the product is

not available through any intermediaries, and must be purchased directly from the

website. Once the product is ordered, the body of the clone is produced in China, and

then shipped to Cuddle Clones headquarters in Louisville, Kentucky. After the fur

customization is complete, shipped through UPS to the consumer.

6. Exhibits

Exhibit 1: Average Dollar Amount Spent on Pets per State

Exhibit 2: Average Disposable Income by State

Exhibit 3: Individuals that identify their dog as a member of the family

Exhibit 4: Profile of Pet Owners

Exhibit 5: Cuddle Clones Logo

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