Small Business Advisory GroupPresents:
SPS Spindle Parts and ServiceMarketing Strategy
Jess BerminghamDanielle Boxer
Stephanie HartensteinDoug Quaranta
Adam StuartYadira Vega
Genevieve WilcoxZak Wood
Summary
The Small Business Advisory Group of Franklin Pierce College, has prepared a marketing plan for Spindle Parts and Service.
The following presentation is a brief overview of our research, findings, objectives, analyses and strategic plans.
Market Situation
• There are a total of 362,829 establishments in the manufacturing industry
• This industry has annual profits of $51 billion, which is up $12.8 billion from this same time last year
• In New Hampshire the number of manufacturing establishments has been steadily increasing
• One downfall is that many of these industries are located on or near the west coast.
Macro-Environmental Situation In America
• Trends in the furniture industry:– The United States and Canada have a combined
furniture production of more than $33 billion dollars– American manufacturing is maturing and changing,
towards a more technological age – The furniture industry grows more or less in unison
with the overall economy– Many manufacturing jobs have migrated toward
countries with lower labor costs
Lifestyle TrendsCONSUMER SPENDING AT DIFFERENT INCOME
LEVELS
Income Level
Expenditure $10,000 -
15,000
$20,000 -
30,000
$50,000 And
Over
Food 17.7 15.8 12.6
Housing 24.8 23.0 24.9
Utilities 8.6 7.1 4.7
Clothing 5.4 5.8 5.8
Transportation 17.4 19.1 17.6
Health Care 7.8 5.5 3.7
Entertainment 3.7 4.7 6.1
Other 6.3 6.7 6.6
Macro-environment in Europe
• The macro environment in Europe is similar to ours here in the United States. In Europe they are also trying to find ways to cut down on pollution.
• The economy in Europe is in a slump, they are trying to find ways to cut costs.
• These could be potentially harmful to starting a new business in Europe.
Macro-environment in Europe cont.
• Larger countries have more money to take on these projects, while the smaller countries don’t have the resources to bring in these new businesses.
• The growth of the market in these small countries can’t handle bringing in these new businesses.
• They cannot justify the high risk and the money that it takes to start these companies in the small countries.
• Very Competitive Market
• Hard to enter the market
• Knowledge of the market is very important
• High start up costs
-Market Situation
Competitive Situation in America
*All of these reasons will deter new . business into the market
Competitive Situation in America-Competitor Outlook
• Plenty of competition located throughout . U.S.
• The ease of shipping makes everyone in . the industry a competitor
• Websites help companies get their name . out to prospective customers
• A high customer base and loyal customers . are key for survival
Competitive Situation in Europe• Two dynamic forces of our time:
Globalization and the online movement• Increased International sales• 338 million Non-English speaking Internet
users and nearly half of all Internet users live in Asia and Europe
• In 2001-2002, analysts determined that 71% of Internet use and 56% of E-Commerce use came from outside the United States (2/3 of all E-Commerce this year 2003 alone)
• Elimination of geographical barriers to entry
• Costs associated with online website construction
• Global Reach Program: allows a small company to enter several online markets for less than $695, while typical translation costs are $50-$100 for a short page consisting of 200-300 words
Competitive Situation in Europe cont’d
Past Product Performance
-Cost of Sales has been consistently even and have never been higher than Sales. Because of these costs, it has left the firm with a respectable Gross Profit- which has never been negative.
-In March 2003, the expenses were 85.4%; May 2003 69.4%, July 28.0%, and in the most recent month, Sept. 2003, they ended with 33.1%
-Profit increased in the month July and then had a significant decrease in the month of September.
Income Statment
(60,000.00)
(40,000.00)
(20,000.00)
-
20,000.00
40,000.00
60,000.00
80,000.00
100,000.00
120,000.00
140,000.00
Sales
Cost of Goods Sold
Gross Profit
Direct Expenses
Selling&AdministrativeOperating Profit
Other Expenses
Taxes
Net Profit
• SPS has a Profit Margin Ratio of 1.88%. What does this mean?
•The Total Assets Turnover is .55 times or 54.9%, which is low and could be higher.
•What this number means is that SPS has $0.55 of sales for every $1 of assets. This is interpreted as the number of dollars in sales generated by each dollar of assets.
Financial Analysis
• SPS has more Liabilities than Assets. This is represented by the Debt Ratio. Basically our consultant team recognizes that SPS is borrowing more then they are investing. The firm’s Debt Ratio is…
As the Debt Ratio is rather high, the Current Ratio is satisfactory. Current Ratio is 6.1% What does this mean?
….SPS has $1.61 of assets for every dollar of debt.
303,660.43/238,127.00
Total Liabilities/Total Assets
127.50%
Cont’d
S.W.O.T Analysis
Strengths:-Clean working environment-Cohesive management team, allowing forefficient communication within the company-Equipment is more specialized, giving SPS anedge on precision jobs-Relationship with competitor next door allowsfor use of equipment without buying it, thereforeproduces more
S.W.O.T. Cont’d
Weaknesses:-High dependence on competitor next door
could backfire
-No general IT personnel, such as an e-commerce specialist
-One technician limits amount of work that can be done at one time
S.W.O.T Cont’dOpportunities:-Website development-Break into European market-Register on the Thomas Registry. Allows forrepresentation along with SPS competitors-Trends in furniture manufacturing are predicted to
grow world wideThreats:-Technology is constantly changing-Acquisition of neighbor company, could bring in a
competitor; unfavorable of the current “partnership” situation.
-Manufacturing jobs are moving south of the border
Financial Objectives
• Lower outsource to below 50%• Increase net sales for the next fiscal year• Lower debt (liabilities)
Marketing Objectives• Increase market share by keeping an open line of
communication with customers, as well as gaining new customers
• Utilize web-site links in conjunction with companies SPS services
• Maintain a high level of customer satisfaction
• Solicit customer feedback through web-site and other methods such as surveys
Action Plans
• Increase advertising budget by 5% ($)
• Create more press releases to send to the local media, as well as the European market
• Create e-marketing campaigns
• Create an easily navigable website
Advantages of increasing your advertising budget
-Remind customers of the benefits of your product or service
-Establish and or maintain a distinct identity-Enhance your reputation
-Attract new customers and replace lost ones
-Slowly build sales to boost you bottom line
Advantages of e-marketing• Cost effective and if done right, can build
brand awareness and loyalty• Typically costs a few cents per message• The business information that customers
provide when signing up for an e-mail newsletter is extremely valuable
• Response rates are strong, 5-35% while traditional mail averages 1-3%
An Effective Website Should:
• Have a simple design and be user-friendly• Informative and upbeat. Consistent with other forms of
media• Be used as a selling device that promotes the company to
prospective customers• Include a homepage with executive summary, address,
phone numbers, and e-mail address.• Include links to other pages• Also be used as a recruiting tool for potential employees
How to use website to penetrate other markets
• Decide which markets the firm would like to target
• Build partnerships with U.S. and European Web integrators and translation companies that have locations in the regions where SPS plans to conduct business
• Locate firms to assist the firm in all the various aspects about globalizing SPS such as marketing consultants, lawyers, after-sales support teams, etc
Thank You for your time…Any Questions?
